Correlation Between Aduro Clean and Verde Clean

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

Diversification Opportunities for Aduro Clean and Verde Clean

-0.42

Correlation Coefficient

Aduro Clean  Verde Clean

Very good diversification

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

Pair Corralation between Aduro Clean and Verde Clean

Given the investment horizon of 90 days Aduro Clean Technologies is expected to generate 1.03 times more return on investment than Verde Clean. However, Aduro Clean is 1.03 times more volatile than Verde Clean Fuels. It trades about 0.05 of its potential returns per unit of risk. Verde Clean Fuels is currently generating about -0.06 per unit of risk. If you would invest  545.00  in Aduro Clean Technologies on October 26, 2024 and sell it today you would earn a total of  26.00  from holding Aduro Clean Technologies or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Aduro Clean Technologies  vs.  Verde Clean Fuels

Aduro Clean Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Verde Clean Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verde Clean Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Verde Clean is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aduro Clean and Verde Clean

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

The idea behind Aduro Clean Technologies and Verde Clean Fuels 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.