Correlation Between PureCycle Technologies and Northern Graphite

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Can any of the company-specific risk be diversified away by investing in both PureCycle Technologies and Northern Graphite 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 Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PureCycle Technologies and Northern Graphite, you can compare the effects of market volatilities on PureCycle Technologies and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureCycle Technologies and Northern Graphite.

Diversification Opportunities for PureCycle Technologies and Northern Graphite

PureCycleNorthernDiversified AwayPureCycleNorthernDiversified Away100%
-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between PureCycle and Northern is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PureCycle Technologies and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 are associated (or correlated) with Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of PureCycle Technologies i.e., PureCycle Technologies and Northern Graphite go up and down completely randomly.

Pair Corralation between PureCycle Technologies and Northern Graphite

Assuming the 90 days horizon PureCycle Technologies is expected to under-perform the Northern Graphite. But the stock apears to be less risky and, when comparing its historical volatility, PureCycle Technologies is 1.51 times less risky than Northern Graphite. The stock trades about -0.04 of its potential returns per unit of risk. The Northern Graphite is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Northern Graphite on November 25, 2024 and sell it today you would lose (1.00) from holding Northern Graphite or give up 10.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

PureCycle Technologies  vs.  Northern Graphite

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-20020406080100
JavaScript chart by amCharts 3.21.15PCTTW NGPHF
       Timeline  
PureCycle Technologies 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days PureCycle Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.533.544.55
Northern Graphite 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Northern Graphite are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Northern Graphite reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.050.060.070.080.090.10.110.120.130.14

PureCycle Technologies and Northern Graphite Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.14-7.59-5.05-2.5-0.04062.314.757.189.6112.05 0.0040.0050.0060.0070.0080.0090.010
JavaScript chart by amCharts 3.21.15PCTTW NGPHF
       Returns  

Pair Trading with PureCycle Technologies and Northern Graphite

The main advantage of trading using opposite PureCycle Technologies and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PureCycle Technologies position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.
The idea behind PureCycle Technologies and Northern Graphite 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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