Correlation Between Interact and BacTech Environmental

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

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

Diversification Opportunities for Interact and BacTech Environmental

0.32

Correlation Coefficient

Interact  BacTech Environmental

Weak diversification

The 3 months correlation between Interact and BacTech is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Interact TV and BacTech Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BacTech Environmental and Interact 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 Interact TV 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 Interact i.e., Interact and BacTech Environmental go up and down completely randomly.

Pair Corralation between Interact and BacTech Environmental

Given the investment horizon of 90 days Interact TV is expected to generate 35.3 times more return on investment than BacTech Environmental. However, Interact is 35.3 times more volatile than BacTech Environmental. It trades about 0.18 of its potential returns per unit of risk. BacTech Environmental is currently generating about -0.01 per unit of risk. If you would invest  0.00  in Interact TV on May 17, 2025 and sell it today you would earn a total of  0.01  from holding Interact TV or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Interact TV  vs.  BacTech Environmental

Interact TV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interact TV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Interact demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable technical and fundamental indicators, BacTech Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Interact and BacTech Environmental

The main advantage of trading using opposite Interact and BacTech Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interact 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 Interact TV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.