Correlation Between Alpha Pro and AAON

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

Diversification Opportunities for Alpha Pro and AAON

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Alpha and AAON is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Pro Tech and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Alpha Pro 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 Alpha Pro Tech are associated (or correlated) with AAON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAON Inc has no effect on the direction of Alpha Pro i.e., Alpha Pro and AAON go up and down completely randomly.

Pair Corralation between Alpha Pro and AAON

Considering the 90-day investment horizon Alpha Pro Tech is expected to generate 0.96 times more return on investment than AAON. However, Alpha Pro Tech is 1.05 times less risky than AAON. It trades about 0.0 of its potential returns per unit of risk. AAON Inc is currently generating about -0.16 per unit of risk. If you would invest  530.00  in Alpha Pro Tech on November 28, 2024 and sell it today you would lose (15.00) from holding Alpha Pro Tech or give up 2.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alpha Pro Tech  vs.  AAON Inc

 Performance 
       Timeline  
Alpha Pro Tech 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Alpha Pro Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alpha Pro is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
AAON Inc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days AAON Inc 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 very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alpha Pro and AAON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alpha Pro and AAON

The main advantage of trading using opposite Alpha Pro and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Pro position performs unexpectedly, AAON 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 AAON will offset losses from the drop in AAON's long position.
The idea behind Alpha Pro Tech and AAON Inc 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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