Correlation Between LiqTech International and Bion Environmental

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

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

Diversification Opportunities for LiqTech International and Bion Environmental

0.45

Correlation Coefficient

LiqTech International  Bion Environmental

Very weak diversification

The 3 months correlation between LiqTech and Bion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Bion Environmental Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bion Environmental 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 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 LiqTech International i.e., LiqTech International and Bion Environmental go up and down completely randomly.

Pair Corralation between LiqTech International and Bion Environmental

Given the investment horizon of 90 days LiqTech International is expected to under-perform the Bion Environmental. But the stock apears to be less risky and, when comparing its historical volatility, LiqTech International is 1.98 times less risky than Bion Environmental. The stock trades about -0.07 of its potential returns per unit of risk. The Bion Environmental Technologies is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Bion Environmental Technologies on December 28, 2024 and sell it today you would lose (4.00) from holding Bion Environmental Technologies or give up 25.0% of portfolio value over 90 days.

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

LiqTech International  vs.  Bion Environmental Technologie

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.

Bion Environmental

Risk-Adjusted Performance

Very Weak

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 abnormal performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with LiqTech International and Bion Environmental

The main advantage of trading using opposite LiqTech International and Bion Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiqTech International 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 LiqTech International 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.