Correlation Between Alta Equipment and AN2 Therapeutics

Can any of the company-specific risk be diversified away by investing in both Alta Equipment and AN2 Therapeutics 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 Alta Equipment and AN2 Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alta Equipment Group and AN2 Therapeutics, you can compare the effects of market volatilities on Alta Equipment and AN2 Therapeutics 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 Alta Equipment with a short position of AN2 Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and AN2 Therapeutics.

Diversification Opportunities for Alta Equipment and AN2 Therapeutics

-0.47

Correlation Coefficient

Alta Equipment  AN2 Therapeutics

Very good diversification

The 3 months correlation between Alta and AN2 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and AN2 Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AN2 Therapeutics and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with AN2 Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AN2 Therapeutics has no effect on the direction of Alta Equipment i.e., Alta Equipment and AN2 Therapeutics go up and down completely randomly.

Pair Corralation between Alta Equipment and AN2 Therapeutics

Given the investment horizon of 90 days Alta Equipment Group is expected to under-perform the AN2 Therapeutics. In addition to that, Alta Equipment is 1.53 times more volatile than AN2 Therapeutics. It trades about -0.1 of its total potential returns per unit of risk. AN2 Therapeutics is currently generating about 0.05 per unit of volatility. If you would invest  144.00  in AN2 Therapeutics on December 27, 2024 and sell it today you would earn a total of  8.00  from holding AN2 Therapeutics or generate 5.56% return on investment over 90 days.

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

Alta Equipment Group  vs.  AN2 Therapeutics

Alta Equipment Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alta Equipment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AN2 Therapeutics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AN2 Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, AN2 Therapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alta Equipment and AN2 Therapeutics

The main advantage of trading using opposite Alta Equipment and AN2 Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, AN2 Therapeutics 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 AN2 Therapeutics will offset losses from the drop in AN2 Therapeutics' long position.

The idea behind Alta Equipment Group and AN2 Therapeutics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.