Correlation Between Clean Harbors and Aqua Metals

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

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

Diversification Opportunities for Clean Harbors and Aqua Metals

-0.38

Correlation Coefficient

Clean Harbors  Aqua Metals

Very good diversification

The 3 months correlation between Clean and Aqua is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Clean Harbors and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and Clean Harbors 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 Clean Harbors are associated (or correlated) with Aqua Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua Metals has no effect on the direction of Clean Harbors i.e., Clean Harbors and Aqua Metals go up and down completely randomly.

Pair Corralation between Clean Harbors and Aqua Metals

Considering the 90-day investment horizon Clean Harbors is expected to generate 0.27 times more return on investment than Aqua Metals. However, Clean Harbors is 3.76 times less risky than Aqua Metals. It trades about -0.03 of its potential returns per unit of risk. Aqua Metals is currently generating about -0.06 per unit of risk. If you would invest  25,969  in Clean Harbors on September 13, 2024 and sell it today you would lose (1,170) from holding Clean Harbors or give up 4.5% of portfolio value over 90 days.

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

Clean Harbors  vs.  Aqua Metals

Clean Harbors

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Harbors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Clean Harbors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Aqua Metals

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Clean Harbors and Aqua Metals

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

The idea behind Clean Harbors and Aqua Metals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .