Correlation Between American Security and Alternus Energy

Can any of the company-specific risk be diversified away by investing in both American Security and Alternus Energy 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 American Security and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Security Resources and Alternus Energy Group, you can compare the effects of market volatilities on American Security and Alternus Energy 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 American Security with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Security and Alternus Energy.

Diversification Opportunities for American Security and Alternus Energy

-0.04

Correlation Coefficient

American Security  Alternus Energy

Good diversification

The 3 months correlation between American and Alternus is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding American Security Resources and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and American Security 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 American Security Resources are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of American Security i.e., American Security and Alternus Energy go up and down completely randomly.

Pair Corralation between American Security and Alternus Energy

Given the investment horizon of 90 days American Security Resources is expected to generate 2.15 times more return on investment than Alternus Energy. However, American Security is 2.15 times more volatile than Alternus Energy Group. It trades about 0.1 of its potential returns per unit of risk. Alternus Energy Group is currently generating about -0.15 per unit of risk. If you would invest  0.01  in American Security Resources on December 30, 2024 and sell it today you would earn a total of  0.00  from holding American Security Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

American Security Resources  vs.  Alternus Energy Group

American Security

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Security Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Security exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alternus Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alternus Energy 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.

Pair Trading with American Security and Alternus Energy

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

The idea behind American Security Resources and Alternus Energy Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.