Correlation Between BacTech Environmental and Arts Way

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

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

Diversification Opportunities for BacTech Environmental and Arts Way

-0.48

Correlation Coefficient

BacTech Environmental  Arts Way

Very good diversification

The 3 months correlation between BacTech and Arts is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BacTech Environmental and Arts Way Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arts Way Manufacturing and BacTech 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 BacTech Environmental are associated (or correlated) with Arts Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arts Way Manufacturing has no effect on the direction of BacTech Environmental i.e., BacTech Environmental and Arts Way go up and down completely randomly.

Pair Corralation between BacTech Environmental and Arts Way

Assuming the 90 days horizon BacTech Environmental is expected to under-perform the Arts Way. But the otc stock apears to be less risky and, when comparing its historical volatility, BacTech Environmental is 1.1 times less risky than Arts Way. The otc stock trades about -0.04 of its potential returns per unit of risk. The Arts Way Manufacturing Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  179.00  in Arts Way Manufacturing Co on May 12, 2025 and sell it today you would earn a total of  215.00  from holding Arts Way Manufacturing Co or generate 120.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

BacTech Environmental  vs.  Arts Way Manufacturing Co

BacTech Environmental

Risk-Adjusted Performance

Weakest

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

Arts Way Manufacturing

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arts Way Manufacturing Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Arts Way showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BacTech Environmental and Arts Way

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

The idea behind BacTech Environmental and Arts Way Manufacturing Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.