Correlation Between Casella Waste and Perma Fix

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

Diversification Opportunities for Casella Waste and Perma Fix

0.18

Correlation Coefficient

Casella Waste  Perma Fix

Average diversification

The 3 months correlation between Casella and Perma is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and Perma Fix Environmental Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix 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 Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of Casella Waste i.e., Casella Waste and Perma Fix go up and down completely randomly.

Pair Corralation between Casella Waste and Perma Fix

Given the investment horizon of 90 days Casella Waste is expected to generate 4.51 times less return on investment than Perma Fix. But when comparing it to its historical volatility, Casella Waste Systems is 3.06 times less risky than Perma Fix. It trades about 0.05 of its potential returns per unit of risk. Perma Fix Environmental Svcs is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Perma Fix Environmental Svcs on September 21, 2024 and sell it today you would earn a total of  688.00  from holding Perma Fix Environmental Svcs or generate 187.98% return on investment over 90 days.

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

Casella Waste Systems  vs.  Perma Fix Environmental Svcs

Casella Waste Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Casella Waste Systems are ranked lower than 5 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Perma Fix is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Casella Waste and Perma Fix

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

The idea behind Casella Waste Systems and Perma Fix Environmental Svcs 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.