Correlation Between Gold Reserve and PureCycle Technologies

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

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

Diversification Opportunities for Gold Reserve and PureCycle Technologies

-0.59

Correlation Coefficient

Gold Reserve  PureCycle Technologies

Excellent diversification

The 3 months correlation between Gold and PureCycle is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and PureCycle Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureCycle Technologies and Gold Reserve 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 Gold Reserve 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 Gold Reserve i.e., Gold Reserve and PureCycle Technologies go up and down completely randomly.

Pair Corralation between Gold Reserve and PureCycle Technologies

Assuming the 90 days horizon Gold Reserve is expected to generate 0.66 times more return on investment than PureCycle Technologies. However, Gold Reserve is 1.51 times less risky than PureCycle Technologies. It trades about 0.09 of its potential returns per unit of risk. PureCycle Technologies is currently generating about -0.08 per unit of risk. If you would invest  148.00  in Gold Reserve on December 27, 2024 and sell it today you would earn a total of  32.00  from holding Gold Reserve or generate 21.62% return on investment over 90 days.

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

Gold Reserve  vs.  PureCycle Technologies

Gold Reserve

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Reserve are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Reserve reported solid returns over the last few months and may actually be approaching a breakup point.

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 Gold Reserve and PureCycle Technologies

The main advantage of trading using opposite Gold Reserve and PureCycle Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Reserve 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 Gold Reserve 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.