Correlation Between TOMI Environmental and Euro Tech

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

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

Diversification Opportunities for TOMI Environmental and Euro Tech

-0.02

Correlation Coefficient

TOMI Environmental  Euro Tech

Good diversification

The 3 months correlation between TOMI and Euro is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding TOMI Environmental Solutions 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 TOMI Environmental 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 TOMI Environmental Solutions 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 TOMI Environmental i.e., TOMI Environmental and Euro Tech go up and down completely randomly.

Pair Corralation between TOMI Environmental and Euro Tech

Given the investment horizon of 90 days TOMI Environmental Solutions is expected to under-perform the Euro Tech. In addition to that, TOMI Environmental is 1.8 times more volatile than Euro Tech Holdings. It trades about -0.03 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TOMI Environmental Solutions  vs.  Euro Tech Holdings

TOMI Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOMI Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TOMI Environmental and Euro Tech

The main advantage of trading using opposite TOMI Environmental and Euro Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOMI Environmental 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 TOMI Environmental Solutions 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.