Correlation Between Waste Connections and Perma-Fix Environmental

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

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

Diversification Opportunities for Waste Connections and Perma-Fix Environmental

-0.33

Correlation Coefficient

Waste Connections  Perma-Fix Environmental

Very good diversification

The 3 months correlation between Waste and Perma-Fix is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental and Waste Connections 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 Waste Connections are associated (or correlated) with Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of Waste Connections i.e., Waste Connections and Perma-Fix Environmental go up and down completely randomly.

Pair Corralation between Waste Connections and Perma-Fix Environmental

Assuming the 90 days trading horizon Waste Connections is expected to generate 0.32 times more return on investment than Perma-Fix Environmental. However, Waste Connections is 3.08 times less risky than Perma-Fix Environmental. It trades about 0.13 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about -0.13 per unit of risk. If you would invest  16,353  in Waste Connections on December 30, 2024 and sell it today you would earn a total of  1,552  from holding Waste Connections or generate 9.49% return on investment over 90 days.

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

Waste Connections  vs.  Perma Fix Environmental Servic

Waste Connections

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Perma Fix Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Waste Connections and Perma-Fix Environmental

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

The idea behind Waste Connections and Perma Fix Environmental Services 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..