Correlation Between Azek and Atlas Engineered

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

By analyzing existing cross correlation between Azek Company and Atlas Engineered Products, you can compare the effects of market volatilities on Azek and Atlas Engineered 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 Azek with a short position of Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Atlas Engineered.

Diversification Opportunities for Azek and Atlas Engineered

0.66

Correlation Coefficient

Azek  Atlas Engineered

Poor diversification

The 3 months correlation between Azek and Atlas is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products and Azek 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 Azek Company are associated (or correlated) with Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of Azek i.e., Azek and Atlas Engineered go up and down completely randomly.

Pair Corralation between Azek and Atlas Engineered

Given the investment horizon of 90 days Azek Company is expected to generate 0.61 times more return on investment than Atlas Engineered. However, Azek Company is 1.63 times less risky than Atlas Engineered. It trades about 0.17 of its potential returns per unit of risk. Atlas Engineered Products is currently generating about 0.03 per unit of risk. If you would invest  3,832  in Azek Company on July 12, 2024 and sell it today you would earn a total of  551.00  from holding Azek Company or generate 14.38% return on investment over 90 days.

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

Azek Company  vs.  Atlas Engineered Products

Azek Company

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azek Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Azek is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Atlas Engineered Products

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Azek and Atlas Engineered

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

The idea behind Azek Company and Atlas Engineered Products 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.