Squid in water are rendered about .5 blocks lower than their collision box. This is especially noticeable in 1-block high water, where squid appear half in the ground.

Steps to reproduce

1. Load the attached test world: MCPE-114253 squid render.mcworld
2. Press the button on the command block to spawn a squid in the box.
3. Press the button on the dispenser to toggle water in the space where the squid is located.
4. Attempt to hit the lower part of the squid that hangs below the carpet, then attempt to punch the glass behind the squid by swinging above it.

Expected result

The squid's rendering is not affected by placing and removing water. When you punch the squid where it appears, you hit the squid. When you punch the air above the squid, you don't hit the squid.

Actual result

When you place the water, the squid's rendering shifts by about -0.5 Y. When you then punch the part of the squid that appears below the carpet, you do not hit it. When you punch the space that appears empty above the squid, you hit it. See the attached video: Squid rendering offset by water.mp4