Correlation Between Birchtech Corp and Quipt Home

Can any of the company-specific risk be diversified away by investing in both Birchtech Corp and Quipt Home 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 Quipt Home into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Birchtech Corp and Quipt Home Medical, you can compare the effects of market volatilities on Birchtech Corp and Quipt Home 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 Quipt Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchtech Corp and Quipt Home.

Diversification Opportunities for Birchtech Corp and Quipt Home

-0.26

Correlation Coefficient

Birchtech Corp  Quipt Home

Very good diversification

The 3 months correlation between Birchtech and Quipt is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Birchtech Corp and Quipt Home Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quipt Home Medical 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 Quipt Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quipt Home Medical has no effect on the direction of Birchtech Corp i.e., Birchtech Corp and Quipt Home go up and down completely randomly.

Pair Corralation between Birchtech Corp and Quipt Home

Assuming the 90 days trading horizon Birchtech Corp is expected to under-perform the Quipt Home. But the stock apears to be less risky and, when comparing its historical volatility, Birchtech Corp is 1.24 times less risky than Quipt Home. The stock trades about -0.12 of its potential returns per unit of risk. The Quipt Home Medical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  391.00  in Quipt Home Medical on October 9, 2024 and sell it today you would earn a total of  39.00  from holding Quipt Home Medical or generate 9.97% return on investment over 90 days.

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

Birchtech Corp  vs.  Quipt Home Medical

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 unfluctuating 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.

Quipt Home Medical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quipt Home Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Quipt Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Birchtech Corp and Quipt Home

The main advantage of trading using opposite Birchtech Corp and Quipt Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchtech Corp position performs unexpectedly, Quipt Home 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 Quipt Home will offset losses from the drop in Quipt Home's long position.

The idea behind Birchtech Corp and Quipt Home Medical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.