Correlation Between Purecycle Technologies and Flexible Solutions

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

By analyzing existing cross correlation between Purecycle Technologies Holdings and Flexible Solutions International, you can compare the effects of market volatilities on Purecycle Technologies and Flexible Solutions 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 Flexible Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purecycle Technologies and Flexible Solutions.

Diversification Opportunities for Purecycle Technologies and Flexible Solutions

0.23

Correlation Coefficient

Purecycle Technologies  Flexible Solutions

Modest diversification

The 1 month correlation between Purecycle and Flexible is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Purecycle Technologies Holding and Flexible Solutions Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flexible Solutions 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 Holdings are associated (or correlated) with Flexible Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flexible Solutions has no effect on the direction of Purecycle Technologies i.e., Purecycle Technologies and Flexible Solutions go up and down completely randomly.

Pair Corralation between Purecycle Technologies and Flexible Solutions

Considering the 90-day investment horizon Purecycle Technologies is expected to generate 2.05 times less return on investment than Flexible Solutions. In addition to that, Purecycle Technologies is 1.75 times more volatile than Flexible Solutions International. It trades about 0.03 of its total potential returns per unit of risk. Flexible Solutions International is currently generating about 0.09 per unit of volatility. If you would invest  206.00  in Flexible Solutions International on March 5, 2024 and sell it today you would earn a total of  9.00  from holding Flexible Solutions International or generate 4.37% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Purecycle Technologies Holding  vs.  Flexible Solutions Internation

Purecycle Technologies

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Purecycle Technologies Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Purecycle Technologies may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Flexible Solutions

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Flexible Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Purecycle Technologies and Flexible Solutions

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

The idea behind Purecycle Technologies Holdings and Flexible Solutions International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..