Correlation Between Purecycle Technologies and PureCycle Technologies

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

Diversification Opportunities for Purecycle Technologies and PureCycle Technologies

0.91

Correlation Coefficient

Purecycle Technologies  PureCycle Technologies

Almost no diversification

The 3 months correlation between Purecycle and PureCycle is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Purecycle Technologies Holding and PureCycle Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureCycle Technologies 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 PureCycle Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureCycle Technologies has no effect on the direction of Purecycle Technologies i.e., Purecycle Technologies and PureCycle Technologies go up and down completely randomly.

Pair Corralation between Purecycle Technologies and PureCycle Technologies

Considering the 90-day investment horizon Purecycle Technologies is expected to generate 7.41 times less return on investment than PureCycle Technologies. But when comparing it to its historical volatility, Purecycle Technologies Holdings is 7.08 times less risky than PureCycle Technologies. It trades about 0.05 of its potential returns per unit of risk. PureCycle Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  288.00  in PureCycle Technologies on September 20, 2024 and sell it today you would earn a total of  72.00  from holding PureCycle Technologies or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.37%
Values	Daily Returns

Purecycle Technologies Holding  vs.  PureCycle Technologies

Purecycle Technologies

Risk-Adjusted Performance

5 of 100

Modest

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

PureCycle Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PureCycle Technologies are ranked lower than 9 (%) 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.

Pair Trading with Purecycle Technologies and PureCycle Technologies

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

The idea behind Purecycle Technologies Holdings and PureCycle 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 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.