Correlation Between Aqua Metals and Pioneer Power

Can any of the company-specific risk be diversified away by investing in both Aqua Metals and Pioneer Power 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 Aqua Metals and Pioneer Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqua Metals and Pioneer Power Solutions, you can compare the effects of market volatilities on Aqua Metals and Pioneer Power 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 Aqua Metals with a short position of Pioneer Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Metals and Pioneer Power.

Diversification Opportunities for Aqua Metals and Pioneer Power

0.4

Correlation Coefficient

Aqua Metals  Pioneer Power

Very weak diversification

The 3 months correlation between Aqua and Pioneer is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Metals and Pioneer Power Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Power Solutions and Aqua Metals 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 Aqua Metals are associated (or correlated) with Pioneer Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Power Solutions has no effect on the direction of Aqua Metals i.e., Aqua Metals and Pioneer Power go up and down completely randomly.

Pair Corralation between Aqua Metals and Pioneer Power

Given the investment horizon of 90 days Aqua Metals is expected to under-perform the Pioneer Power. In addition to that, Aqua Metals is 1.28 times more volatile than Pioneer Power Solutions. It trades about -0.05 of its total potential returns per unit of risk. Pioneer Power Solutions is currently generating about 0.04 per unit of volatility. If you would invest  210.00  in Pioneer Power Solutions on December 4, 2024 and sell it today you would earn a total of  114.00  from holding Pioneer Power Solutions or generate 54.29% return on investment over 90 days.

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

Aqua Metals  vs.  Pioneer Power Solutions

Aqua Metals

Risk-Adjusted Performance

Very Weak

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

Pioneer Power Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Power Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Aqua Metals and Pioneer Power

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

The idea behind Aqua Metals and Pioneer Power Solutions 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 Anywhere module to track or share privately all of your investments from the convenience of any device.