Correlation Between Actelis Networks and AAP

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

By analyzing existing cross correlation between Actelis Networks and AAP Inc, you can compare the effects of market volatilities on Actelis Networks and AAP 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 Actelis Networks with a short position of AAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Actelis Networks and AAP.

Diversification Opportunities for Actelis Networks and AAP

0.36

Correlation Coefficient

Actelis Networks  AAP

Weak diversification

The 3 months correlation between Actelis and AAP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Actelis Networks and AAP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAP Inc and Actelis Networks 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 Actelis Networks are associated (or correlated) with AAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAP Inc has no effect on the direction of Actelis Networks i.e., Actelis Networks and AAP go up and down completely randomly.

Pair Corralation between Actelis Networks and AAP

Given the investment horizon of 90 days Actelis Networks is expected to under-perform the AAP. But the stock apears to be less risky and, when comparing its historical volatility, Actelis Networks is 6.88 times less risky than AAP. The stock trades about -0.07 of its potential returns per unit of risk. The AAP Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.03  in AAP Inc on September 3, 2024 and sell it today you would lose (0.01) from holding AAP Inc or give up 33.33% of portfolio value over 90 days.

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

Actelis Networks  vs.  AAP Inc

Actelis Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Actelis Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AAP Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AAP Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, AAP revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Actelis Networks and AAP

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

The idea behind Actelis Networks and AAP 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.