Correlation Between Bion Environmental and Energy

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

By analyzing existing cross correlation between Bion Environmental Technologies and Energy and Water, you can compare the effects of market volatilities on Bion Environmental and Energy 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 Bion Environmental with a short position of Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bion Environmental and Energy.

Diversification Opportunities for Bion Environmental and Energy

-0.54

Correlation Coefficient

Bion Environmental  Energy

Excellent diversification

The 3 months correlation between Bion and Energy is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bion Environmental Technologie and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water and Bion Environmental 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 Bion Environmental Technologies are associated (or correlated) with Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of Bion Environmental i.e., Bion Environmental and Energy go up and down completely randomly.

Pair Corralation between Bion Environmental and Energy

Given the investment horizon of 90 days Bion Environmental Technologies is expected to generate 0.62 times more return on investment than Energy. However, Bion Environmental Technologies is 1.62 times less risky than Energy. It trades about 0.04 of its potential returns per unit of risk. Energy and Water is currently generating about -0.26 per unit of risk. If you would invest  22.00  in Bion Environmental Technologies on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Bion Environmental Technologies or generate 0.0% return on investment over 90 days.

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

Bion Environmental Technologie  vs.  Energy and Water

Bion Environmental

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bion Environmental Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Bion Environmental unveiled solid returns over the last few months and may actually be approaching a breakup point.

Energy and Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy and Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bion Environmental and Energy

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

The idea behind Bion Environmental Technologies and Energy and Water 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.