Correlation Between Pioneer Power and Aqua Metals

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

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

Diversification Opportunities for Pioneer Power and Aqua Metals

-0.74

Correlation Coefficient

Pioneer Power  Aqua Metals

Pay attention - limited upside

The 3 months correlation between Pioneer and Aqua is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Power Solutions and Aqua Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua Metals and Pioneer Power 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 Pioneer Power Solutions 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 Pioneer Power i.e., Pioneer Power and Aqua Metals go up and down completely randomly.

Pair Corralation between Pioneer Power and Aqua Metals

Given the investment horizon of 90 days Pioneer Power Solutions is expected to under-perform the Aqua Metals. But the stock apears to be less risky and, when comparing its historical volatility, Pioneer Power Solutions is 4.76 times less risky than Aqua Metals. The stock trades about -0.1 of its potential returns per unit of risk. The Aqua Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Aqua Metals on September 14, 2024 and sell it today you would earn a total of  5.00  from holding Aqua Metals or generate 2.56% return on investment over 90 days.

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

Pioneer Power Solutions  vs.  Aqua Metals

Pioneer Power Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Power Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Pioneer Power demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Pioneer Power and Aqua Metals

The main advantage of trading using opposite Pioneer Power and Aqua Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pioneer Power 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 Pioneer Power Solutions 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.