Correlation Between Alpha Pro and SPX Corp

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

Diversification Opportunities for Alpha Pro and SPX Corp

0.74

Correlation Coefficient

Alpha Pro  SPX Corp

Poor diversification

The 3 months correlation between Alpha and SPX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Pro Tech and SPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX Corp 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 SPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX Corp has no effect on the direction of Alpha Pro i.e., Alpha Pro and SPX Corp go up and down completely randomly.

Pair Corralation between Alpha Pro and SPX Corp

Considering the 90-day investment horizon Alpha Pro is expected to generate 2.5 times less return on investment than SPX Corp. In addition to that, Alpha Pro is 1.24 times more volatile than SPX Corp. It trades about 0.08 of its total potential returns per unit of risk. SPX Corp is currently generating about 0.25 per unit of volatility. If you would invest  14,473  in SPX Corp on May 2, 2025 and sell it today you would earn a total of  3,653  from holding SPX Corp or generate 25.24% return on investment over 90 days.

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

Alpha Pro Tech  vs.  SPX Corp

Alpha Pro Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Pro Tech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alpha Pro may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SPX Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPX Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPX Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Pro and SPX Corp

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

The idea behind Alpha Pro Tech and SPX 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.