Correlation Between Cleantech Power and Aduro Clean

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

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

Diversification Opportunities for Cleantech Power and Aduro Clean

0.0

Correlation Coefficient

Cleantech Power  Aduro Clean

Pay attention - limited upside

The 3 months correlation between Cleantech and Aduro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cleantech Power Corp 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 Cleantech 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 Cleantech Power Corp 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 Cleantech Power i.e., Cleantech Power and Aduro Clean go up and down completely randomly.

Pair Corralation between Cleantech Power and Aduro Clean

Assuming the 90 days horizon Cleantech Power Corp is expected to generate 16.96 times more return on investment than Aduro Clean. However, Cleantech Power is 16.96 times more volatile than Aduro Clean Technologies. It trades about 0.1 of its potential returns per unit of risk. Aduro Clean Technologies is currently generating about 0.13 per unit of risk. If you would invest  5.02  in Cleantech Power Corp on September 25, 2024 and sell it today you would lose (4.43) from holding Cleantech Power Corp or give up 88.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	7.69%
Values	Daily Returns

Cleantech Power Corp  vs.  Aduro Clean Technologies

Cleantech Power Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleantech Power Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cleantech Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aduro Clean Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cleantech Power and Aduro Clean

The main advantage of trading using opposite Cleantech Power and Aduro Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleantech Power 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 Cleantech Power Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.