Correlation Between LiqTech International and Aduro Clean

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

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

Diversification Opportunities for LiqTech International and Aduro Clean

0.08

Correlation Coefficient

LiqTech International  Aduro Clean

Significant diversification

The 3 months correlation between LiqTech and Aduro is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LiqTech International and Aduro Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aduro Clean Technologies and LiqTech International 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 LiqTech International are associated (or correlated) with Aduro Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aduro Clean Technologies has no effect on the direction of LiqTech International i.e., LiqTech International and Aduro Clean go up and down completely randomly.

Pair Corralation between LiqTech International and Aduro Clean

Given the investment horizon of 90 days LiqTech International is expected to under-perform the Aduro Clean. In addition to that, LiqTech International is 1.13 times more volatile than Aduro Clean Technologies. It trades about -0.13 of its total potential returns per unit of risk. Aduro Clean Technologies is currently generating about 0.14 per unit of volatility. If you would invest  455.00  in Aduro Clean Technologies on September 21, 2024 and sell it today you would earn a total of  105.00  from holding Aduro Clean Technologies or generate 23.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.13%
Values	Daily Returns

LiqTech International  vs.  Aduro Clean Technologies

LiqTech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LiqTech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aduro Clean Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LiqTech International and Aduro Clean

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

The idea behind LiqTech International and Aduro Clean Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.