Correlation Between Bion Environmental and 374Water Common

Can any of the company-specific risk be diversified away by investing in both Bion Environmental and 374Water Common 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 374Water Common 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 374Water Common Stock, you can compare the effects of market volatilities on Bion Environmental and 374Water Common 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 374Water Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bion Environmental and 374Water Common.

Diversification Opportunities for Bion Environmental and 374Water Common

0.76

Correlation Coefficient

Bion Environmental  374Water Common

Poor diversification

The 3 months correlation between Bion and 374Water is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bion Environmental Technologie and 374Water Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 374Water Common Stock 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 374Water Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 374Water Common Stock has no effect on the direction of Bion Environmental i.e., Bion Environmental and 374Water Common go up and down completely randomly.

Pair Corralation between Bion Environmental and 374Water Common

Given the investment horizon of 90 days Bion Environmental Technologies is expected to generate 2.29 times more return on investment than 374Water Common. However, Bion Environmental is 2.29 times more volatile than 374Water Common Stock. It trades about -0.01 of its potential returns per unit of risk. 374Water Common Stock is currently generating about -0.06 per unit of risk. If you would invest  49.00  in Bion Environmental Technologies on September 28, 2024 and sell it today you would lose (32.00) from holding Bion Environmental Technologies or give up 65.31% of portfolio value over 90 days.

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

Bion Environmental Technologie  vs.  374Water Common Stock

Bion Environmental

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Bion Environmental Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bion Environmental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

374Water Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 374Water Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bion Environmental and 374Water Common

The main advantage of trading using opposite Bion Environmental and 374Water Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bion Environmental position performs unexpectedly, 374Water Common 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 374Water Common will offset losses from the drop in 374Water Common's long position.

The idea behind Bion Environmental Technologies and 374Water Common Stock 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.