Correlation Between Purecycle Technologies and ClearSign Combustion

Can any of the company-specific risk be diversified away by investing in both Purecycle Technologies and ClearSign Combustion 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 ClearSign Combustion 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 ClearSign Combustion, you can compare the effects of market volatilities on Purecycle Technologies and ClearSign Combustion 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 ClearSign Combustion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purecycle Technologies and ClearSign Combustion.

Diversification Opportunities for Purecycle Technologies and ClearSign Combustion

-0.07

Correlation Coefficient

Purecycle Technologies  ClearSign Combustion

Good diversification

The 3 months correlation between Purecycle and ClearSign is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Purecycle Technologies Holding and ClearSign Combustion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearSign Combustion 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 ClearSign Combustion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearSign Combustion has no effect on the direction of Purecycle Technologies i.e., Purecycle Technologies and ClearSign Combustion go up and down completely randomly.

Pair Corralation between Purecycle Technologies and ClearSign Combustion

Considering the 90-day investment horizon Purecycle Technologies is expected to generate 33.24 times less return on investment than ClearSign Combustion. But when comparing it to its historical volatility, Purecycle Technologies Holdings is 2.07 times less risky than ClearSign Combustion. It trades about 0.01 of its potential returns per unit of risk. ClearSign Combustion is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  54.00  in ClearSign Combustion on July 1, 2025 and sell it today you would earn a total of  27.00  from holding ClearSign Combustion or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Purecycle Technologies Holding  vs.  ClearSign Combustion

Purecycle Technologies

Risk-Adjusted Performance

Weakest

Over the last 90 days Purecycle Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Purecycle Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ClearSign Combustion

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Purecycle Technologies and ClearSign Combustion

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

The idea behind Purecycle Technologies Holdings and ClearSign Combustion 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.