Correlation Between Impax Environmental and Biotech Growth

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

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

Diversification Opportunities for Impax Environmental and Biotech Growth

0.51

Correlation Coefficient

Impax Environmental  Biotech Growth

Very weak diversification

The 3 months correlation between Impax and Biotech is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Impax Environmental Markets and The Biotech Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotech Growth and Impax Environmental 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 Impax Environmental Markets are associated (or correlated) with Biotech Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotech Growth has no effect on the direction of Impax Environmental i.e., Impax Environmental and Biotech Growth go up and down completely randomly.

Pair Corralation between Impax Environmental and Biotech Growth

Assuming the 90 days trading horizon Impax Environmental Markets is expected to generate 0.46 times more return on investment than Biotech Growth. However, Impax Environmental Markets is 2.18 times less risky than Biotech Growth. It trades about 0.28 of its potential returns per unit of risk. The Biotech Growth is currently generating about 0.08 per unit of risk. If you would invest  34,100  in Impax Environmental Markets on April 24, 2025 and sell it today you would earn a total of  4,900  from holding Impax Environmental Markets or generate 14.37% return on investment over 90 days.

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

Impax Environmental Markets  vs.  The Biotech Growth

Impax Environmental

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Impax Environmental Markets are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Impax Environmental exhibited solid returns over the last few months and may actually be approaching a breakup point.

Biotech Growth

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Biotech Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Biotech Growth may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Impax Environmental and Biotech Growth

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

The idea behind Impax Environmental Markets and The Biotech Growth 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.