Correlation Between Aduro Clean and Zura Bio

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

Diversification Opportunities for Aduro Clean and Zura Bio

-0.41

Correlation Coefficient

Aduro Clean  Zura Bio

Very good diversification

The 3 months correlation between Aduro and Zura is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and Zura Bio Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zura Bio Limited 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 Zura Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zura Bio Limited has no effect on the direction of Aduro Clean i.e., Aduro Clean and Zura Bio go up and down completely randomly.

Pair Corralation between Aduro Clean and Zura Bio

Given the investment horizon of 90 days Aduro Clean Technologies is expected to generate 0.83 times more return on investment than Zura Bio. However, Aduro Clean Technologies is 1.2 times less risky than Zura Bio. It trades about 0.13 of its potential returns per unit of risk. Zura Bio Limited is currently generating about -0.25 per unit of risk. If you would invest  455.00  in Aduro Clean Technologies on September 24, 2024 and sell it today you would earn a total of  91.00  from holding Aduro Clean Technologies or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Aduro Clean Technologies  vs.  Zura Bio Limited

Aduro Clean Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Zura Bio Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zura Bio Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aduro Clean and Zura Bio

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

The idea behind Aduro Clean Technologies and Zura Bio Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.