Correlation Between Aduro Clean and Tsakos Energy

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

Diversification Opportunities for Aduro Clean and Tsakos Energy

0.22

Correlation Coefficient

Aduro Clean  Tsakos Energy

Modest diversification

The 3 months correlation between Aduro and Tsakos is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation 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 Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Aduro Clean i.e., Aduro Clean and Tsakos Energy go up and down completely randomly.

Pair Corralation between Aduro Clean and Tsakos Energy

Given the investment horizon of 90 days Aduro Clean Technologies is expected to generate 1.19 times more return on investment than Tsakos Energy. However, Aduro Clean is 1.19 times more volatile than Tsakos Energy Navigation. It trades about 0.13 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about -0.04 per unit of risk. If you would invest  569.00  in Aduro Clean Technologies on October 8, 2024 and sell it today you would earn a total of  38.00  from holding Aduro Clean Technologies or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aduro Clean Technologies  vs.  Tsakos Energy Navigation

Aduro Clean Technologies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aduro Clean and Tsakos Energy

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

The idea behind Aduro Clean Technologies and Tsakos Energy Navigation 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.