Correlation Between Aker Carbon and PureCycle Technologies

Can any of the company-specific risk be diversified away by investing in both Aker Carbon and PureCycle Technologies 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 Aker Carbon and PureCycle Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Aker Carbon and PureCycle Technologies

0.63

Correlation Coefficient

Aker Carbon  PureCycle Technologies

Poor diversification

The 3 months correlation between Aker and PureCycle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and PureCycle Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureCycle Technologies and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with PureCycle Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureCycle Technologies has no effect on the direction of Aker Carbon i.e., Aker Carbon and PureCycle Technologies go up and down completely randomly.

Pair Corralation between Aker Carbon and PureCycle Technologies

Assuming the 90 days horizon Aker Carbon Capture is expected to generate 0.95 times more return on investment than PureCycle Technologies. However, Aker Carbon Capture is 1.05 times less risky than PureCycle Technologies. It trades about -0.04 of its potential returns per unit of risk. PureCycle Technologies is currently generating about -0.1 per unit of risk. If you would invest  56.00  in Aker Carbon Capture on December 30, 2024 and sell it today you would lose (23.00) from holding Aker Carbon Capture or give up 41.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Aker Carbon Capture  vs.  PureCycle Technologies

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PureCycle Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days PureCycle Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Aker Carbon and PureCycle Technologies

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

The idea behind Aker Carbon Capture and PureCycle Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..