Correlation Between LiqTech International and Energy

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

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

Diversification Opportunities for LiqTech International and Energy

0.59

Correlation Coefficient

LiqTech International  Energy

Very weak diversification

The 3 months correlation between LiqTech and Energy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Energy and Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy and Water 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 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy and Water has no effect on the direction of LiqTech International i.e., LiqTech International and Energy go up and down completely randomly.

Pair Corralation between LiqTech International and Energy

Given the investment horizon of 90 days LiqTech International is expected to under-perform the Energy. But the stock apears to be less risky and, when comparing its historical volatility, LiqTech International is 4.01 times less risky than Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Energy and Water is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.38  in Energy and Water on December 29, 2024 and sell it today you would lose (0.16) from holding Energy and Water or give up 42.11% 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.  Energy and Water

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 latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Energy and Water

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energy and Water has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LiqTech International and Energy

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

The idea behind LiqTech International and Energy and Water 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..