Correlation Between BQE Water and Critic Clothing

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

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

Diversification Opportunities for BQE Water and Critic Clothing

-0.45

Correlation Coefficient

BQE Water  Critic Clothing

Very good diversification

The 3 months correlation between BQE and Critic is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BQE Water and Critic Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critic Clothing and BQE Water 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 BQE Water are associated (or correlated) with Critic Clothing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critic Clothing has no effect on the direction of BQE Water i.e., BQE Water and Critic Clothing go up and down completely randomly.

Pair Corralation between BQE Water and Critic Clothing

Assuming the 90 days horizon BQE Water is expected to under-perform the Critic Clothing. But the pink sheet apears to be less risky and, when comparing its historical volatility, BQE Water is 16.44 times less risky than Critic Clothing. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Critic Clothing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.59  in Critic Clothing on December 21, 2024 and sell it today you would earn a total of  1.41  from holding Critic Clothing or generate 88.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

BQE Water  vs.  Critic Clothing

BQE Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days BQE Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BQE Water is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Critic Clothing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Critic Clothing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Critic Clothing reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BQE Water and Critic Clothing

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

The idea behind BQE Water and Critic Clothing 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.