Correlation Between Aduro Clean and Cleanaway Waste

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

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

Diversification Opportunities for Aduro Clean and Cleanaway Waste

0.29

Correlation Coefficient

Aduro Clean  Cleanaway Waste

Modest diversification

The 3 months correlation between Aduro and Cleanaway is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana and Aduro Clean 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 Aduro Clean Technologies are associated (or correlated) with Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Aduro Clean i.e., Aduro Clean and Cleanaway Waste go up and down completely randomly.

Pair Corralation between Aduro Clean and Cleanaway Waste

Assuming the 90 days horizon Aduro Clean Technologies is expected to generate 0.61 times more return on investment than Cleanaway Waste. However, Aduro Clean Technologies is 1.65 times less risky than Cleanaway Waste. It trades about 0.13 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.07 per unit of risk. If you would invest  102.00  in Aduro Clean Technologies on January 26, 2024 and sell it today you would earn a total of  7.00  from holding Aduro Clean Technologies or generate 6.86% return on investment over 90 days.

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

Aduro Clean Technologies  vs.  Cleanaway Waste Management

Aduro Clean Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Cleanaway Waste Mana

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Aduro Clean and Cleanaway Waste

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

The idea behind Aduro Clean Technologies and Cleanaway Waste Management 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.