Correlation Between Alpha Pro and Limbach Holdings
Can any of the company-specific risk be diversified away by investing in both Alpha Pro and Limbach Holdings 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 Limbach Holdings 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 Limbach Holdings, you can compare the effects of market volatilities on Alpha Pro and Limbach Holdings 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 Limbach Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Pro and Limbach Holdings.
Diversification Opportunities for Alpha Pro and Limbach Holdings
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alpha and Limbach is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Pro Tech and Limbach Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limbach Holdings 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 Limbach Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limbach Holdings has no effect on the direction of Alpha Pro i.e., Alpha Pro and Limbach Holdings go up and down completely randomly.
Pair Corralation between Alpha Pro and Limbach Holdings
Considering the 90-day investment horizon Alpha Pro Tech is expected to under-perform the Limbach Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Pro Tech is 2.79 times less risky than Limbach Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Limbach Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 7,878 in Limbach Holdings on August 30, 2024 and sell it today you would earn a total of 1,998 from holding Limbach Holdings or generate 25.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alpha Pro Tech vs. Limbach Holdings
Performance |
| Timeline |
| Alpha Pro Tech |
| Limbach Holdings |
Alpha Pro and Limbach Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Pro and Limbach Holdings
The main advantage of trading using opposite Alpha Pro and Limbach Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Pro position performs unexpectedly, Limbach Holdings 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 Limbach Holdings will offset losses from the drop in Limbach Holdings' long position.| Alpha Pro vs. Quanex Building Products | Alpha Pro vs. Janus International Group | Alpha Pro vs. Azek Company | Alpha Pro vs. Armstrong World Industries |
| Limbach Holdings vs. MYR Group | Limbach Holdings vs. Granite Construction Incorporated | Limbach Holdings vs. Construction Partners | Limbach Holdings vs. Great Lakes Dredge |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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