Correlation Between CVW CleanTech and Aduro Clean

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

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

Diversification Opportunities for CVW CleanTech and Aduro Clean

0.32

Correlation Coefficient

CVW CleanTech  Aduro Clean

Weak diversification

The 3 months correlation between CVW and Aduro is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Aduro Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aduro Clean Technologies and CVW CleanTech 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 CVW CleanTech are associated (or correlated) with Aduro Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aduro Clean Technologies has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Aduro Clean go up and down completely randomly.

Pair Corralation between CVW CleanTech and Aduro Clean

Assuming the 90 days horizon CVW CleanTech is expected to under-perform the Aduro Clean. But the otc stock apears to be less risky and, when comparing its historical volatility, CVW CleanTech is 1.41 times less risky than Aduro Clean. The otc stock trades about -0.02 of its potential returns per unit of risk. The Aduro Clean Technologies is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  455.00  in Aduro Clean Technologies on September 30, 2024 and sell it today you would earn a total of  180.00  from holding Aduro Clean Technologies or generate 39.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	31.75%
Values	Daily Returns

CVW CleanTech  vs.  Aduro Clean Technologies

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aduro Clean Technologies

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 15 (%) 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.

Pair Trading with CVW CleanTech and Aduro Clean

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

The idea behind CVW CleanTech and Aduro Clean 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.