Correlation Between Waste Connections and OriginClear

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

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

Diversification Opportunities for Waste Connections and OriginClear

0.19

Correlation Coefficient

Waste Connections  OriginClear

Average diversification

The 3 months correlation between Waste and OriginClear is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and Waste Connections 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 Waste Connections are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Waste Connections i.e., Waste Connections and OriginClear go up and down completely randomly.

Pair Corralation between Waste Connections and OriginClear

Considering the 90-day investment horizon Waste Connections is expected to generate 0.08 times more return on investment than OriginClear. However, Waste Connections is 13.0 times less risky than OriginClear. It trades about -0.14 of its potential returns per unit of risk. OriginClear is currently generating about -0.05 per unit of risk. If you would invest  16,730  in Waste Connections on February 4, 2024 and sell it today you would lose (312.00) from holding Waste Connections or give up 1.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Waste Connections  vs.  OriginClear

Waste Connections

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Waste Connections is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

OriginClear

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OriginClear are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, OriginClear displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waste Connections and OriginClear

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

The idea behind Waste Connections and OriginClear 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .