Correlation Between LiqTech International and Euro Tech

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

By analyzing existing cross correlation between LiqTech International and Euro Tech Holdings, you can compare the effects of market volatilities on LiqTech International and Euro Tech 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 Euro Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiqTech International and Euro Tech.

Diversification Opportunities for LiqTech International and Euro Tech

0.7

Correlation Coefficient

LiqTech International  Euro Tech

Poor diversification

The 3 months correlation between LiqTech and Euro is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Euro Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Tech Holdings 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 Euro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Tech Holdings has no effect on the direction of LiqTech International i.e., LiqTech International and Euro Tech go up and down completely randomly.

Pair Corralation between LiqTech International and Euro Tech

Given the investment horizon of 90 days LiqTech International is expected to under-perform the Euro Tech. In addition to that, LiqTech International is 2.46 times more volatile than Euro Tech Holdings. It trades about -0.12 of its total potential returns per unit of risk. Euro Tech Holdings is currently generating about -0.02 per unit of volatility. If you would invest  152.00  in Euro Tech Holdings on August 30, 2024 and sell it today you would lose (8.00) from holding Euro Tech Holdings or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

LiqTech International  vs.  Euro Tech Holdings

LiqTech International

Risk-Adjusted Performance

0 of 100

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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Euro Tech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euro Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Euro Tech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LiqTech International and Euro Tech

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

The idea behind LiqTech International and Euro Tech Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.