Correlation Between LiqTech International and Arq

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

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

Diversification Opportunities for LiqTech International and Arq

0.87

Correlation Coefficient

LiqTech International  Arq

Very poor diversification

The 3 months correlation between LiqTech and Arq is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc and LiqTech International 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 LiqTech International 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 LiqTech International i.e., LiqTech International and Arq go up and down completely randomly.

Pair Corralation between LiqTech International and Arq

Given the investment horizon of 90 days LiqTech International is expected to generate 1.22 times more return on investment than Arq. However, LiqTech International is 1.22 times more volatile than Arq Inc. It trades about -0.07 of its potential returns per unit of risk. Arq Inc is currently generating about -0.26 per unit of risk. If you would invest  188.00  in LiqTech International on December 28, 2024 and sell it today you would lose (35.00) from holding LiqTech International or give up 18.62% of portfolio value over 90 days.

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

LiqTech International  vs.  Arq Inc

LiqTech International

Risk-Adjusted Performance

Very Weak

Over the last 90 days LiqTech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 LiqTech International and Arq

The main advantage of trading using opposite LiqTech International and Arq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiqTech International 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 LiqTech International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.