Correlation Between BHCCN and Arq

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

By analyzing existing cross correlation between BHCCN 11 30 SEP 28 and Arq Inc, you can compare the effects of market volatilities on BHCCN and Arq 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 BHCCN with a short position of Arq. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHCCN and Arq.

Diversification Opportunities for BHCCN and Arq

0.47

Correlation Coefficient

BHCCN  Arq

Very weak diversification

The 3 months correlation between BHCCN and Arq is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BHCCN 11 30 SEP 28 and Arq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arq Inc and BHCCN 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 BHCCN 11 30 SEP 28 are associated (or correlated) with Arq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arq Inc has no effect on the direction of BHCCN i.e., BHCCN and Arq go up and down completely randomly.

Pair Corralation between BHCCN and Arq

Assuming the 90 days trading horizon BHCCN 11 30 SEP 28 is expected to under-perform the Arq. But the bond apears to be less risky and, when comparing its historical volatility, BHCCN 11 30 SEP 28 is 3.05 times less risky than Arq. The bond trades about 0.0 of its potential returns per unit of risk. The Arq Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Arq Inc on October 12, 2024 and sell it today you would earn a total of  321.00  from holding Arq Inc or generate 103.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.9%
Values	Daily Returns

BHCCN 11 30 SEP 28  vs.  Arq Inc

BHCCN 11 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHCCN 11 30 SEP 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for BHCCN 11 30 SEP 28 investors.

Arq Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BHCCN and Arq

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

The idea behind BHCCN 11 30 SEP 28 and Arq Inc 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.