There is intrinsic accuracy and there is practical accuracy. Intrinsic accuracy is the degree of accuracy that the weapon/ammo combination is mechanically capable of. Intrinsic accuracy is best tested in some sort of machine rest, so as to remove human error. Practical accuracy is the degree of accuracy a skilled shooter can attain with the weapon. Thus sights, trigger quality, and "ergonomics" are irrelevant to intrinsic accuracy, but impact practical accuracy to a great degree.
The AK's sights are not optimal for best practical accuracy. They are coarse and have a short sight radius, which exaggerates aiming errors. Most AK's have buttstocks that are too short for most Americans. Also, most AK triggers are far from what one would select for a target match (although I do find the typical Kalashnikov "roll-off" trigger release to be pretty good for attaining a surprise break). All this to say, the AK is what it is. It is a meat-ax, meant to work reliably in spite of incredible abuse. In spite of the overly optimistic sight adjustments, the AK is typically used well inside 100 yards.
It is probably worth trying several different kinds of ammo in your rifle, to see if it has a preference for a particular kind. You might consider mounting a scope or red-dot sight. A scope, of course, does nothing for intrinsic accuracy, but it can help you SEE better and hold more closely and consistantly than the AK's iron sights. If you mount an optic, you should us a mount that secures to the AK's receiver, not its flimsy top cover.
Rosco