Correlation Between Republic Services and BacTech Environmental

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

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

Diversification Opportunities for Republic Services and BacTech Environmental

-0.47

Correlation Coefficient

Republic Services  BacTech Environmental

Very good diversification

The 3 months correlation between Republic and BacTech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Republic Services and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and Republic Services 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 Republic Services are associated (or correlated) with BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of Republic Services i.e., Republic Services and BacTech Environmental go up and down completely randomly.

Pair Corralation between Republic Services and BacTech Environmental

Considering the 90-day investment horizon Republic Services is expected to generate 0.1 times more return on investment than BacTech Environmental. However, Republic Services is 9.69 times less risky than BacTech Environmental. It trades about 0.07 of its potential returns per unit of risk. BacTech Environmental is currently generating about 0.0 per unit of risk. If you would invest  19,061  in Republic Services on September 15, 2024 and sell it today you would earn a total of  1,836  from holding Republic Services or generate 9.63% return on investment over 90 days.

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

Republic Services  vs.  BacTech Environmental

Republic Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Republic Services is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BacTech Environmental

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BacTech Environmental are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, BacTech Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Republic Services and BacTech Environmental

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

The idea behind Republic Services and BacTech Environmental 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.