Correlation Between Astec Industries and Alamo
Can any of the company-specific risk be diversified away by investing in both Astec Industries and Alamo 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 Astec Industries and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astec Industries and Alamo Group, you can compare the effects of market volatilities on Astec Industries and Alamo 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 Astec Industries with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and Alamo.
Diversification Opportunities for Astec Industries and Alamo
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Astec and Alamo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Astec Industries 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 Astec Industries are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Astec Industries i.e., Astec Industries and Alamo go up and down completely randomly.
Pair Corralation between Astec Industries and Alamo
Given the investment horizon of 90 days Astec Industries is expected to generate 6.82 times less return on investment than Alamo. In addition to that, Astec Industries is 1.43 times more volatile than Alamo Group. It trades about 0.01 of its total potential returns per unit of risk. Alamo Group is currently generating about 0.07 per unit of volatility. If you would invest 11,640 in Alamo Group on January 20, 2024 and sell it today you would earn a total of 8,845 from holding Alamo Group or generate 75.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Astec Industries vs. Alamo Group
Performance |
Timeline |
Astec Industries |
Alamo Group |
Astec Industries and Alamo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Astec Industries and Alamo
The main advantage of trading using opposite Astec Industries and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.Astec Industries vs. Hyster Yale Materials Handling | Astec Industries vs. Manitex International | Astec Industries vs. Shyft Group | Astec Industries vs. Rev Group |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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