Correlation Between BacTech Environmental and EcoPlus

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

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

Diversification Opportunities for BacTech Environmental and EcoPlus

-0.69

Correlation Coefficient

BacTech Environmental  EcoPlus

Excellent diversification

The 3 months correlation between BacTech and EcoPlus is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding BacTech Environmental and EcoPlus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoPlus 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 EcoPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoPlus has no effect on the direction of BacTech Environmental i.e., BacTech Environmental and EcoPlus go up and down completely randomly.

Pair Corralation between BacTech Environmental and EcoPlus

Assuming the 90 days horizon BacTech Environmental is expected to generate 0.73 times more return on investment than EcoPlus. However, BacTech Environmental is 1.36 times less risky than EcoPlus. It trades about 0.14 of its potential returns per unit of risk. EcoPlus is currently generating about -0.08 per unit of risk. If you would invest  2.75  in BacTech Environmental on January 16, 2025 and sell it today you would earn a total of  1.71  from holding BacTech Environmental or generate 62.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

BacTech Environmental  vs.  EcoPlus

BacTech Environmental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BacTech Environmental are ranked lower than 11 (%) 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.

EcoPlus

Risk-Adjusted Performance

Very Weak

Over the last 90 days EcoPlus 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 basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with BacTech Environmental and EcoPlus

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

The idea behind BacTech Environmental and EcoPlus 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.