Correlation Between Astec Industries and Hyster Yale

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

By analyzing existing cross correlation between Astec Industries and Hyster Yale Materials Handling, you can compare the effects of market volatilities on Astec Industries and Hyster Yale 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 Hyster Yale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and Hyster Yale.

Diversification Opportunities for Astec Industries and Hyster Yale

-0.5

Correlation Coefficient

Astec Industries  Hyster Yale

Very good diversification

The 3 months correlation between Astec and Hyster is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials 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 Hyster Yale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Astec Industries i.e., Astec Industries and Hyster Yale go up and down completely randomly.

Pair Corralation between Astec Industries and Hyster Yale

Given the investment horizon of 90 days Astec Industries is expected to under-perform the Hyster Yale. In addition to that, Astec Industries is 2.49 times more volatile than Hyster Yale Materials Handling. It trades about -0.31 of its total potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about -0.32 per unit of volatility. If you would invest  6,635  in Hyster Yale Materials Handling on February 6, 2024 and sell it today you would lose (755.00) from holding Hyster Yale Materials Handling or give up 11.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astec Industries  vs.  Hyster Yale Materials Handling

Astec Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astec Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astec Industries is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Astec Industries and Hyster Yale

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

The idea behind Astec Industries and Hyster Yale Materials Handling 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.