Correlation Between PureCycle Technologies and AppHarvest

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

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

Diversification Opportunities for PureCycle Technologies and AppHarvest

-0.7

Correlation Coefficient

PureCycle Technologies  AppHarvest

Excellent diversification

The 3 months correlation between PureCycle and AppHarvest is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PureCycle Technologies and AppHarvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppHarvest and PureCycle Technologies 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 PureCycle Technologies are associated (or correlated) with AppHarvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppHarvest has no effect on the direction of PureCycle Technologies i.e., PureCycle Technologies and AppHarvest go up and down completely randomly.

Pair Corralation between PureCycle Technologies and AppHarvest

If you would invest  141.00  in PureCycle Technologies on September 1, 2024 and sell it today you would earn a total of  349.00  from holding PureCycle Technologies or generate 247.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.64%
Values	Daily Returns

PureCycle Technologies  vs.  AppHarvest

PureCycle Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PureCycle Technologies are ranked lower than 17 (%) 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.

AppHarvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AppHarvest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, AppHarvest is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PureCycle Technologies and AppHarvest

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

The idea behind PureCycle Technologies and AppHarvest 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 .