Correlation Between BQE Water and TOMI Environmental

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

Diversification Opportunities for BQE Water and TOMI Environmental

0.5

Correlation Coefficient

BQE Water  TOMI Environmental

Very weak diversification

The 3 months correlation between BQE and TOMI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BQE Water and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI 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 TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of BQE Water i.e., BQE Water and TOMI Environmental go up and down completely randomly.

Pair Corralation between BQE Water and TOMI Environmental

Assuming the 90 days horizon BQE Water is expected to generate 0.25 times more return on investment than TOMI Environmental. However, BQE Water is 3.95 times less risky than TOMI Environmental. It trades about -0.09 of its potential returns per unit of risk. TOMI Environmental Solutions is currently generating about -0.04 per unit of risk. If you would invest  4,320  in BQE Water on December 2, 2024 and sell it today you would lose (223.00) from holding BQE Water or give up 5.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.02%
Values	Daily Returns

BQE Water  vs.  TOMI Environmental Solutions

BQE Water

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BQE Water are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BQE Water may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TOMI Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOMI Environmental Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, TOMI Environmental showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BQE Water and TOMI Environmental

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

The idea behind BQE Water and TOMI Environmental Solutions 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.