Correlation Between Charah Solutions and BacTech Environmental

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

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

Diversification Opportunities for Charah Solutions and BacTech Environmental

0.0

Correlation Coefficient

Charah Solutions  BacTech Environmental

Pay attention - limited upside

The 3 months correlation between Charah and BacTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Charah Solutions and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and Charah Solutions 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 Charah Solutions are associated (or correlated) with BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of Charah Solutions i.e., Charah Solutions and BacTech Environmental go up and down completely randomly.

Pair Corralation between Charah Solutions and BacTech Environmental

If you would invest  2.10  in BacTech Environmental on December 29, 2024 and sell it today you would earn a total of  1.08  from holding BacTech Environmental or generate 51.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Charah Solutions  vs.  BacTech Environmental

Charah Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charah Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Charah Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BacTech Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BacTech Environmental are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, BacTech Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charah Solutions and BacTech Environmental

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

The idea behind Charah Solutions and BacTech 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.