Correlation Between Arcosa and Api Group

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

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

Diversification Opportunities for Arcosa and Api Group

0.7

Correlation Coefficient

Arcosa  Api Group

Poor diversification

The 3 months correlation between Arcosa and Api is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Arcosa Inc and Api Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api Group Corp and Arcosa 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 Arcosa Inc are associated (or correlated) with Api Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api Group Corp has no effect on the direction of Arcosa i.e., Arcosa and Api Group go up and down completely randomly.

Pair Corralation between Arcosa and Api Group

Considering the 90-day investment horizon Arcosa Inc is expected to under-perform the Api Group. In addition to that, Arcosa is 1.09 times more volatile than Api Group Corp. It trades about -0.12 of its total potential returns per unit of risk. Api Group Corp is currently generating about -0.01 per unit of volatility. If you would invest  3,736  in Api Group Corp on January 15, 2025 and sell it today you would lose (153.00) from holding Api Group Corp or give up 4.1% of portfolio value over 90 days.

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

Arcosa Inc  vs.  Api Group Corp

Arcosa Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcosa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Api Group Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Api Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Api Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Arcosa and Api Group

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

The idea behind Arcosa Inc and Api Group Corp 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.