Correlation Between Alaska Power and Princeton Capital

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

By analyzing existing cross correlation between Alaska Power Telephone and Princeton Capital, you can compare the effects of market volatilities on Alaska Power and Princeton Capital 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 Alaska Power with a short position of Princeton Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Power and Princeton Capital.

Diversification Opportunities for Alaska Power and Princeton Capital

0.17

Correlation Coefficient

Alaska Power  Princeton Capital

Average diversification

The 3 months correlation between Alaska and Princeton is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Power Telephone and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital and Alaska Power 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 Alaska Power Telephone are associated (or correlated) with Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of Alaska Power i.e., Alaska Power and Princeton Capital go up and down completely randomly.

Pair Corralation between Alaska Power and Princeton Capital

Given the investment horizon of 90 days Alaska Power Telephone is expected to generate 0.31 times more return on investment than Princeton Capital. However, Alaska Power Telephone is 3.25 times less risky than Princeton Capital. It trades about 0.01 of its potential returns per unit of risk. Princeton Capital is currently generating about -0.19 per unit of risk. If you would invest  6,000  in Alaska Power Telephone on May 1, 2025 and sell it today you would earn a total of  0.00  from holding Alaska Power Telephone or generate 0.0% return on investment over 90 days.

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

Alaska Power Telephone  vs.  Princeton Capital

Alaska Power Telephone

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Power Telephone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Alaska Power is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Princeton Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Princeton Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alaska Power and Princeton Capital

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

The idea behind Alaska Power Telephone and Princeton Capital 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.