Correlation Between BQE Water and BluMetric Environmental

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

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

Diversification Opportunities for BQE Water and BluMetric Environmental

-0.45

Correlation Coefficient

BQE Water  BluMetric Environmental

Very good diversification

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

Pair Corralation between BQE Water and BluMetric Environmental

Assuming the 90 days horizon BQE Water is expected to under-perform the BluMetric Environmental. But the pink sheet apears to be less risky and, when comparing its historical volatility, BQE Water is 4.76 times less risky than BluMetric Environmental. The pink sheet trades about -0.13 of its potential returns per unit of risk. The BluMetric Environmental is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  34.00  in BluMetric Environmental on September 13, 2024 and sell it today you would earn a total of  30.00  from holding BluMetric Environmental or generate 88.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

BQE Water  vs.  BluMetric Environmental

BQE Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BQE Water has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BluMetric Environmental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BluMetric Environmental are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, BluMetric Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BQE Water and BluMetric Environmental

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

The idea behind BQE Water and BluMetric Environmental 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.