Correlation Between Applied Industrial and Albany International

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

By analyzing existing cross correlation between Applied Industrial Technologies and Albany International, you can compare the effects of market volatilities on Applied Industrial and Albany International 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 Applied Industrial with a short position of Albany International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Industrial and Albany International.

Diversification Opportunities for Applied Industrial and Albany International

0.32

Correlation Coefficient

Applied Industrial  Albany International

Weak diversification

The 3 months correlation between Applied and Albany is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Applied Industrial Technologie and Albany International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albany International and Applied Industrial 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 Applied Industrial Technologies are associated (or correlated) with Albany International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albany International has no effect on the direction of Applied Industrial i.e., Applied Industrial and Albany International go up and down completely randomly.

Pair Corralation between Applied Industrial and Albany International

Considering the 90-day investment horizon Applied Industrial Technologies is expected to generate 0.52 times more return on investment than Albany International. However, Applied Industrial Technologies is 1.91 times less risky than Albany International. It trades about 0.16 of its potential returns per unit of risk. Albany International is currently generating about -0.04 per unit of risk. If you would invest  22,366  in Applied Industrial Technologies on May 5, 2025 and sell it today you would earn a total of  4,052  from holding Applied Industrial Technologies or generate 18.12% return on investment over 90 days.

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

Applied Industrial Technologie  vs.  Albany International

Applied Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Industrial Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Applied Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Albany International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albany International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Applied Industrial and Albany International

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

The idea behind Applied Industrial Technologies and Albany International 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.