Correlation Between BQE Water and BacTech Environmental

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

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

Diversification Opportunities for BQE Water and BacTech Environmental

-0.71

Correlation Coefficient

BQE Water  BacTech Environmental

Pay attention - limited upside

The 3 months correlation between BQE and BacTech is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BQE Water and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and BQE Water 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 BQE Water are associated (or correlated) with BacTech Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BacTech Environmental has no effect on the direction of BQE Water i.e., BQE Water and BacTech Environmental go up and down completely randomly.

Pair Corralation between BQE Water and BacTech Environmental

Assuming the 90 days horizon BQE Water is expected to generate 0.47 times more return on investment than BacTech Environmental. However, BQE Water is 2.15 times less risky than BacTech Environmental. It trades about 0.1 of its potential returns per unit of risk. BacTech Environmental is currently generating about -0.04 per unit of risk. If you would invest  3,470  in BQE Water on May 5, 2025 and sell it today you would earn a total of  499.00  from holding BQE Water or generate 14.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

BQE Water  vs.  BacTech Environmental

BQE Water

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BQE Water are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BQE Water reported solid returns over the last few months and may actually be approaching a breakup point.

BacTech Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days BacTech Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BQE Water and BacTech Environmental

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

The idea behind BQE Water and BacTech Environmental 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.