Correlation Between Euro Tech and Arq

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

By analyzing existing cross correlation between Euro Tech Holdings and Arq Inc, you can compare the effects of market volatilities on Euro Tech and Arq 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 Euro Tech with a short position of Arq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euro Tech and Arq.

Diversification Opportunities for Euro Tech and Arq

0.37

Correlation Coefficient

Euro Tech  Arq

Weak diversification

The 3 months correlation between Euro and Arq is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Euro Tech Holdings and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc and Euro Tech 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 Euro Tech Holdings are associated (or correlated) with Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of Euro Tech i.e., Euro Tech and Arq go up and down completely randomly.

Pair Corralation between Euro Tech and Arq

Given the investment horizon of 90 days Euro Tech Holdings is expected to generate 1.07 times more return on investment than Arq. However, Euro Tech is 1.07 times more volatile than Arq Inc. It trades about -0.08 of its potential returns per unit of risk. Arq Inc is currently generating about -0.26 per unit of risk. If you would invest  146.00  in Euro Tech Holdings on December 26, 2024 and sell it today you would lose (26.00) from holding Euro Tech Holdings or give up 17.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Euro Tech Holdings  vs.  Arq Inc

Euro Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euro Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Arq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Euro Tech and Arq

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

The idea behind Euro Tech Holdings and Arq Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.