Correlation Between Atmus Filtration and PureCycle Technologies

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

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

Diversification Opportunities for Atmus Filtration and PureCycle Technologies

0.48

Correlation Coefficient

Atmus Filtration  PureCycle Technologies

Very weak diversification

The 3 months correlation between Atmus and PureCycle is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Atmus Filtration Technologies and PureCycle Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureCycle Technologies and Atmus Filtration 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 Atmus Filtration Technologies 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 Atmus Filtration i.e., Atmus Filtration and PureCycle Technologies go up and down completely randomly.

Pair Corralation between Atmus Filtration and PureCycle Technologies

Given the investment horizon of 90 days Atmus Filtration Technologies is expected to generate 0.17 times more return on investment than PureCycle Technologies. However, Atmus Filtration Technologies is 5.96 times less risky than PureCycle Technologies. It trades about -0.25 of its potential returns per unit of risk. PureCycle Technologies is currently generating about -0.29 per unit of risk. If you would invest  4,103  in Atmus Filtration Technologies on October 13, 2024 and sell it today you would lose (189.00) from holding Atmus Filtration Technologies or give up 4.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Atmus Filtration Technologies  vs.  PureCycle Technologies

Atmus Filtration Tec

Risk-Adjusted Performance

0 of 100

Very Weak

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

PureCycle Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PureCycle Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PureCycle Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atmus Filtration and PureCycle Technologies

The main advantage of trading using opposite Atmus Filtration and PureCycle Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atmus Filtration 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 Atmus Filtration Technologies 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.