Correlation Between Advent Technologies and Verde Clean

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

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

Diversification Opportunities for Advent Technologies and Verde Clean

0.27

Correlation Coefficient

Advent Technologies  Verde Clean

Modest diversification

The 3 months correlation between Advent and Verde is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Advent Technologies Holdings and Verde Clean Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verde Clean Fuels and Advent 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 Advent Technologies Holdings are associated (or correlated) with Verde Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verde Clean Fuels has no effect on the direction of Advent Technologies i.e., Advent Technologies and Verde Clean go up and down completely randomly.

Pair Corralation between Advent Technologies and Verde Clean

Considering the 90-day investment horizon Advent Technologies is expected to generate 7.63 times less return on investment than Verde Clean. But when comparing it to its historical volatility, Advent Technologies Holdings is 8.64 times less risky than Verde Clean. It trades about 0.14 of its potential returns per unit of risk. Verde Clean Fuels is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Verde Clean Fuels on August 31, 2024 and sell it today you would earn a total of  4.00  from holding Verde Clean Fuels or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

Advent Technologies Holdings  vs.  Verde Clean Fuels

Advent Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Technologies Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Advent Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Verde Clean Fuels

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Verde Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Technologies and Verde Clean

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

The idea behind Advent Technologies Holdings and Verde Clean Fuels 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.