Correlation Between Birchtech Corp and North American

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

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

Diversification Opportunities for Birchtech Corp and North American

-0.23

Correlation Coefficient

Birchtech Corp  North American

Very good diversification

The 3 months correlation between Birchtech and North is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Birchtech Corp and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const and Birchtech Corp 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 Birchtech Corp are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of Birchtech Corp i.e., Birchtech Corp and North American go up and down completely randomly.

Pair Corralation between Birchtech Corp and North American

Assuming the 90 days trading horizon Birchtech Corp is expected to generate 2.25 times more return on investment than North American. However, Birchtech Corp is 2.25 times more volatile than North American Construction. It trades about 0.08 of its potential returns per unit of risk. North American Construction is currently generating about 0.01 per unit of risk. If you would invest  75.00  in Birchtech Corp on April 24, 2025 and sell it today you would earn a total of  12.00  from holding Birchtech Corp or generate 16.0% return on investment over 90 days.

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

Birchtech Corp  vs.  North American Construction

Birchtech Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Birchtech Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Birchtech Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

North American Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, North American is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Birchtech Corp and North American

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

The idea behind Birchtech Corp and North American Construction 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.