Correlation Between BQE Water and LanzaTech Global

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

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

Diversification Opportunities for BQE Water and LanzaTech Global

0.55

Correlation Coefficient

BQE Water  LanzaTech Global

Very weak diversification

The 3 months correlation between BQE and LanzaTech is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BQE Water and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global 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 LanzaTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LanzaTech Global has no effect on the direction of BQE Water i.e., BQE Water and LanzaTech Global go up and down completely randomly.

Pair Corralation between BQE Water and LanzaTech Global

Assuming the 90 days horizon BQE Water is expected to generate 5.1 times less return on investment than LanzaTech Global. But when comparing it to its historical volatility, BQE Water is 4.36 times less risky than LanzaTech Global. It trades about 0.22 of its potential returns per unit of risk. LanzaTech Global is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  101.00  in LanzaTech Global on October 8, 2024 and sell it today you would earn a total of  67.00  from holding LanzaTech Global or generate 66.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

BQE Water  vs.  LanzaTech Global

BQE Water

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BQE Water are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

LanzaTech Global

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LanzaTech Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, LanzaTech Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BQE Water and LanzaTech Global

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

The idea behind BQE Water and LanzaTech Global 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 Transaction History module to view history of all your transactions and understand their impact on performance.