Correlation Between Alpha Pro and Armstrong Flooring

Can any of the company-specific risk be diversified away by investing in both Alpha Pro and Armstrong Flooring 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 Armstrong Flooring 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 Armstrong Flooring, you can compare the effects of market volatilities on Alpha Pro and Armstrong Flooring 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 Armstrong Flooring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Pro and Armstrong Flooring.

Diversification Opportunities for Alpha Pro and Armstrong Flooring

-0.12

Correlation Coefficient

Alpha Pro  Armstrong Flooring

Good diversification

The 3 months correlation between Alpha and Armstrong is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Pro Tech and Armstrong Flooring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armstrong Flooring 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 Armstrong Flooring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armstrong Flooring has no effect on the direction of Alpha Pro i.e., Alpha Pro and Armstrong Flooring go up and down completely randomly.

Pair Corralation between Alpha Pro and Armstrong Flooring

Considering the 90-day investment horizon Alpha Pro Tech is expected to under-perform the Armstrong Flooring. But the stock apears to be less risky and, when comparing its historical volatility, Alpha Pro Tech is 114.23 times less risky than Armstrong Flooring. The stock trades about -0.03 of its potential returns per unit of risk. The Armstrong Flooring is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Armstrong Flooring on July 22, 2025 and sell it today you would earn a total of  0.04  from holding Armstrong Flooring or generate 400.0% return on investment over 90 days.

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

Alpha Pro Tech  vs.  Armstrong Flooring

Alpha Pro Tech

Risk-Adjusted Performance

Weakest

Over the last 90 days Alpha Pro Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alpha Pro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Armstrong Flooring

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Armstrong Flooring are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Armstrong Flooring reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Pro and Armstrong Flooring

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

The idea behind Alpha Pro Tech and Armstrong Flooring 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..