Correlation Between Terex and AmeraMex International

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

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

Diversification Opportunities for Terex and AmeraMex International

0.22

Correlation Coefficient

Terex  AmeraMex International

Modest diversification

The 3 months correlation between Terex and AmeraMex is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Terex and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and Terex 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 Terex are associated (or correlated) with AmeraMex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmeraMex International has no effect on the direction of Terex i.e., Terex and AmeraMex International go up and down completely randomly.

Pair Corralation between Terex and AmeraMex International

Considering the 90-day investment horizon Terex is expected to under-perform the AmeraMex International. But the stock apears to be less risky and, when comparing its historical volatility, Terex is 7.21 times less risky than AmeraMex International. The stock trades about -0.22 of its potential returns per unit of risk. The AmeraMex International is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  14.00  in AmeraMex International on March 11, 2024 and sell it today you would lose (3.00) from holding AmeraMex International or give up 21.43% of portfolio value over 90 days.

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

Terex  vs.  AmeraMex International

Terex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Terex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Terex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AmeraMex International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Terex and AmeraMex International

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

The idea behind Terex and AmeraMex International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.