Correlation Between Clean Harbors and BacTech Environmental

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

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

Diversification Opportunities for Clean Harbors and BacTech Environmental

-0.69

Correlation Coefficient

Clean Harbors  BacTech Environmental

Excellent diversification

The 3 months correlation between Clean and BacTech is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Clean Harbors and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and Clean Harbors 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 Clean Harbors 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 Clean Harbors i.e., Clean Harbors and BacTech Environmental go up and down completely randomly.

Pair Corralation between Clean Harbors and BacTech Environmental

Considering the 90-day investment horizon Clean Harbors is expected to generate 0.19 times more return on investment than BacTech Environmental. However, Clean Harbors is 5.2 times less risky than BacTech Environmental. It trades about 0.17 of its potential returns per unit of risk. BacTech Environmental is currently generating about -0.06 per unit of risk. If you would invest  21,738  in Clean Harbors on May 1, 2025 and sell it today you would earn a total of  2,091  from holding Clean Harbors or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Clean Harbors  vs.  BacTech Environmental

Clean Harbors

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Harbors are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Clean Harbors may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 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 August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Clean Harbors and BacTech Environmental

The main advantage of trading using opposite Clean Harbors and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Harbors 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 Clean Harbors 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.