Correlation Between Alpha Pro and Owens Corning

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

Diversification Opportunities for Alpha Pro and Owens Corning

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Alpha and Owens is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Pro Tech and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning 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 Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of Alpha Pro i.e., Alpha Pro and Owens Corning go up and down completely randomly.

Pair Corralation between Alpha Pro and Owens Corning

Considering the 90-day investment horizon Alpha Pro Tech is expected to under-perform the Owens Corning. In addition to that, Alpha Pro is 1.45 times more volatile than Owens Corning. It trades about -0.03 of its total potential returns per unit of risk. Owens Corning is currently generating about 0.0 per unit of volatility. If you would invest  17,190  in Owens Corning on October 3, 2024 and sell it today you would lose (158.00) from holding Owens Corning or give up 0.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Alpha Pro Tech  vs.  Owens Corning

 Performance 
       Timeline  
Alpha Pro Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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.
Owens Corning 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Owens Corning has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Owens Corning is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Alpha Pro and Owens Corning Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alpha Pro and Owens Corning

The main advantage of trading using opposite Alpha Pro and Owens Corning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Pro position performs unexpectedly, Owens Corning 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 Owens Corning will offset losses from the drop in Owens Corning's long position.
The idea behind Alpha Pro Tech and Owens Corning 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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