Correlation Between Aduro Clean and PacifiCorp

Can any of the company-specific risk be diversified away by investing in both Aduro Clean and PacifiCorp 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 PacifiCorp 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 PacifiCorp, you can compare the effects of market volatilities on Aduro Clean and PacifiCorp 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 PacifiCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aduro Clean and PacifiCorp.

Diversification Opportunities for Aduro Clean and PacifiCorp

-0.42

Correlation Coefficient

Aduro Clean  PacifiCorp

Very good diversification

The 3 months correlation between Aduro and PacifiCorp is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of Aduro Clean i.e., Aduro Clean and PacifiCorp go up and down completely randomly.

Pair Corralation between Aduro Clean and PacifiCorp

Given the investment horizon of 90 days Aduro Clean Technologies is expected to under-perform the PacifiCorp. But the otc stock apears to be less risky and, when comparing its historical volatility, Aduro Clean Technologies is 59.9 times less risky than PacifiCorp. The otc stock trades about -0.01 of its potential returns per unit of risk. The PacifiCorp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  100,000,000  in PacifiCorp on December 20, 2024 and sell it today you would lose (99,980,675) from holding PacifiCorp or give up 99.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	45.0%
Values	Daily Returns

Aduro Clean Technologies  vs.  PacifiCorp

Aduro Clean Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aduro Clean Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Aduro Clean is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

PacifiCorp

Risk-Adjusted Performance

Good

Over the last 90 days PacifiCorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile essential indicators, PacifiCorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aduro Clean and PacifiCorp

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

The idea behind Aduro Clean Technologies and PacifiCorp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.