Correlation Between Casella Waste and BacTech Environmental

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

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

Diversification Opportunities for Casella Waste and BacTech Environmental

-0.47

Correlation Coefficient

Casella Waste  BacTech Environmental

Very good diversification

The 3 months correlation between Casella and BacTech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and Casella Waste 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 Casella Waste Systems 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 Casella Waste i.e., Casella Waste and BacTech Environmental go up and down completely randomly.

Pair Corralation between Casella Waste and BacTech Environmental

Given the investment horizon of 90 days Casella Waste Systems is expected to generate 0.14 times more return on investment than BacTech Environmental. However, Casella Waste Systems is 7.01 times less risky than BacTech Environmental. It trades about 0.05 of its potential returns per unit of risk. BacTech Environmental is currently generating about 0.0 per unit of risk. If you would invest  9,859  in Casella Waste Systems on September 14, 2024 and sell it today you would earn a total of  803.00  from holding Casella Waste Systems or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Casella Waste Systems  vs.  BacTech Environmental

Casella Waste Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Casella Waste is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

BacTech Environmental

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BacTech Environmental are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent 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 Casella Waste and BacTech Environmental

The main advantage of trading using opposite Casella Waste and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casella Waste 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 Casella Waste Systems 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.