Correlation Between Scholastic and Aduro Clean

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

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

Diversification Opportunities for Scholastic and Aduro Clean

-0.03

Correlation Coefficient

Scholastic  Aduro Clean

Good diversification

The 3 months correlation between Scholastic and Aduro is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic 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 Scholastic 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 Scholastic 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 Scholastic i.e., Scholastic and Aduro Clean go up and down completely randomly.

Pair Corralation between Scholastic and Aduro Clean

Given the investment horizon of 90 days Scholastic is expected to generate 1.01 times more return on investment than Aduro Clean. However, Scholastic is 1.01 times more volatile than Aduro Clean Technologies. It trades about 0.05 of its potential returns per unit of risk. Aduro Clean Technologies is currently generating about -0.03 per unit of risk. If you would invest  1,983  in Scholastic on December 22, 2024 and sell it today you would earn a total of  139.00  from holding Scholastic or generate 7.01% return on investment over 90 days.

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

Scholastic  vs.  Aduro Clean Technologies

Scholastic

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scholastic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical indicators, Scholastic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aduro Clean Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aduro Clean Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Aduro Clean is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Scholastic and Aduro Clean

The main advantage of trading using opposite Scholastic and Aduro Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic 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 Scholastic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.