Correlation Between Birchtech Corp and Pembina Pipeline

Can any of the company-specific risk be diversified away by investing in both Birchtech Corp and Pembina Pipeline at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Birchtech Corp and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Birchtech Corp and Pembina Pipeline Corp, you can compare the effects of market volatilities on Birchtech Corp and Pembina Pipeline and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Birchtech Corp with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchtech Corp and Pembina Pipeline.

Diversification Opportunities for Birchtech Corp and Pembina Pipeline

0.55

Correlation Coefficient

Birchtech Corp  Pembina Pipeline

Very weak diversification

The 3 months correlation between Birchtech and Pembina is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Birchtech Corp and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp and Birchtech Corp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Birchtech Corp are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Birchtech Corp i.e., Birchtech Corp and Pembina Pipeline go up and down completely randomly.

Pair Corralation between Birchtech Corp and Pembina Pipeline

Assuming the 90 days trading horizon Birchtech Corp is expected to under-perform the Pembina Pipeline. In addition to that, Birchtech Corp is 6.15 times more volatile than Pembina Pipeline Corp. It trades about -0.12 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.2 per unit of volatility. If you would invest  5,497  in Pembina Pipeline Corp on October 8, 2024 and sell it today you would lose (158.00) from holding Pembina Pipeline Corp or give up 2.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Birchtech Corp  vs.  Pembina Pipeline Corp

Birchtech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birchtech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pembina Pipeline Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembina Pipeline Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Birchtech Corp and Pembina Pipeline

The main advantage of trading using opposite Birchtech Corp and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchtech Corp position performs unexpectedly, Pembina Pipeline can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.

The idea behind Birchtech Corp and Pembina Pipeline Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.