Correlation Between Altus Power and Advent Technologies

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

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

Diversification Opportunities for Altus Power and Advent Technologies

0.38

Correlation Coefficient

Altus Power  Advent Technologies

Weak diversification

The 3 months correlation between Altus and Advent is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies and Altus Power 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 Altus Power are associated (or correlated) with Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Altus Power i.e., Altus Power and Advent Technologies go up and down completely randomly.

Pair Corralation between Altus Power and Advent Technologies

Given the investment horizon of 90 days Altus Power is expected to generate 1.32 times less return on investment than Advent Technologies. But when comparing it to its historical volatility, Altus Power is 1.65 times less risky than Advent Technologies. It trades about 0.08 of its potential returns per unit of risk. Advent Technologies Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.95  in Advent Technologies Holdings on September 12, 2024 and sell it today you would earn a total of  0.05  from holding Advent Technologies Holdings or generate 5.26% return on investment over 90 days.

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

Altus Power  vs.  Advent Technologies Holdings

Altus Power

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Power are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Altus Power unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advent Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Technologies Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Advent Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altus Power and Advent Technologies

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

The idea behind Altus Power and Advent Technologies Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.