Correlation Between Atlas Engineered and Azek

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

By analyzing existing cross correlation between Atlas Engineered Products and Azek Company, you can compare the effects of market volatilities on Atlas Engineered and Azek 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 Atlas Engineered with a short position of Azek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Engineered and Azek.

Diversification Opportunities for Atlas Engineered and Azek

-0.5

Correlation Coefficient

Atlas Engineered  Azek

Very good diversification

The 3 months correlation between Atlas and Azek is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Engineered Products and Azek Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azek Company and Atlas Engineered 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 Atlas Engineered Products are associated (or correlated) with Azek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azek Company has no effect on the direction of Atlas Engineered i.e., Atlas Engineered and Azek go up and down completely randomly.

Pair Corralation between Atlas Engineered and Azek

Assuming the 90 days horizon Atlas Engineered Products is expected to under-perform the Azek. In addition to that, Atlas Engineered is 2.15 times more volatile than Azek Company. It trades about -0.08 of its total potential returns per unit of risk. Azek Company is currently generating about 0.24 per unit of volatility. If you would invest  4,134  in Azek Company on September 2, 2024 and sell it today you would earn a total of  1,178  from holding Azek Company or generate 28.5% return on investment over 90 days.

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

Atlas Engineered Products  vs.  Azek Company

Atlas Engineered Products

Risk-Adjusted Performance

0 of 100

Very Weak

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

Azek Company

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Azek Company are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Azek disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlas Engineered and Azek

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

The idea behind Atlas Engineered Products and Azek Company 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 Global Correlations module to find global opportunities by holding instruments from different markets.