Correlation Between Aduro Clean and Delta CleanTech

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

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

Diversification Opportunities for Aduro Clean and Delta CleanTech

0.11

Correlation Coefficient

Aduro Clean  Delta CleanTech

Average diversification

The 3 months correlation between Aduro and Delta is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and Delta CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta CleanTech and Aduro Clean 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 Aduro Clean Technologies are associated (or correlated) with Delta CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta CleanTech has no effect on the direction of Aduro Clean i.e., Aduro Clean and Delta CleanTech go up and down completely randomly.

Pair Corralation between Aduro Clean and Delta CleanTech

Assuming the 90 days horizon Aduro Clean is expected to generate 36.49 times less return on investment than Delta CleanTech. But when comparing it to its historical volatility, Aduro Clean Technologies is 11.16 times less risky than Delta CleanTech. It trades about 0.05 of its potential returns per unit of risk. Delta CleanTech is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.60  in Delta CleanTech on December 19, 2024 and sell it today you would earn a total of  1.37  from holding Delta CleanTech or generate 85.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.98%
Values	Daily Returns

Aduro Clean Technologies  vs.  Delta CleanTech

Aduro Clean Technologies

Risk-Adjusted Performance

Insignificant

Over the last 90 days Aduro Clean Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical indicators, Aduro Clean may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Delta CleanTech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta CleanTech are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Delta CleanTech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aduro Clean and Delta CleanTech

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

The idea behind Aduro Clean Technologies and Delta CleanTech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.