Correlation Between Energy Recovery and Bion Environmental

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

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

Diversification Opportunities for Energy Recovery and Bion Environmental

0.65

Correlation Coefficient

Energy Recovery  Bion Environmental

Poor diversification

The 3 months correlation between Energy and Bion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Energy Recovery and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental and Energy Recovery 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 Energy Recovery are associated (or correlated) with Bion Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bion Environmental has no effect on the direction of Energy Recovery i.e., Energy Recovery and Bion Environmental go up and down completely randomly.

Pair Corralation between Energy Recovery and Bion Environmental

Given the investment horizon of 90 days Energy Recovery is expected to generate 0.4 times more return on investment than Bion Environmental. However, Energy Recovery is 2.53 times less risky than Bion Environmental. It trades about -0.01 of its potential returns per unit of risk. Bion Environmental Technologies is currently generating about -0.01 per unit of risk. If you would invest  2,216  in Energy Recovery on September 28, 2024 and sell it today you would lose (730.00) from holding Energy Recovery or give up 32.94% of portfolio value over 90 days.

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

Energy Recovery  vs.  Bion Environmental Technologie

Energy Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Bion Environmental

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Bion Environmental Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bion Environmental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Energy Recovery and Bion Environmental

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

The idea behind Energy Recovery and Bion Environmental Technologies 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.