Correlation Between PureCycle Technologies and Alderon Iron

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

By analyzing existing cross correlation between PureCycle Technologies and Alderon Iron Ore, you can compare the effects of market volatilities on PureCycle Technologies and Alderon Iron 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 Alderon Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureCycle Technologies and Alderon Iron.

Diversification Opportunities for PureCycle Technologies and Alderon Iron

0.0

Correlation Coefficient

PureCycle Technologies  Alderon Iron

Pay attention - limited upside

The 3 months correlation between PureCycle and Alderon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PureCycle Technologies and Alderon Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alderon Iron Ore 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 are associated (or correlated) with Alderon Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alderon Iron Ore has no effect on the direction of PureCycle Technologies i.e., PureCycle Technologies and Alderon Iron go up and down completely randomly.

Pair Corralation between PureCycle Technologies and Alderon Iron

If you would invest  285.00  in PureCycle Technologies on February 5, 2024 and sell it today you would lose (125.00) from holding PureCycle Technologies or give up 43.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.88%
Values	Daily Returns

PureCycle Technologies  vs.  Alderon Iron Ore

PureCycle Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PureCycle Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PureCycle Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Alderon Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PureCycle Technologies and Alderon Iron

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

The idea behind PureCycle Technologies and Alderon Iron Ore 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.