Correlation Between Alamo and AmeraMex International
Can any of the company-specific risk be diversified away by investing in both Alamo 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 Alamo and AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and AmeraMex International, you can compare the effects of market volatilities on Alamo 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 Alamo with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and AmeraMex International.
Diversification Opportunities for Alamo and AmeraMex International
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alamo and AmeraMex is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and Alamo 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 Alamo Group 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 Alamo i.e., Alamo and AmeraMex International go up and down completely randomly.
Pair Corralation between Alamo and AmeraMex International
Considering the 90-day investment horizon Alamo Group is expected to generate 0.23 times more return on investment than AmeraMex International. However, Alamo Group is 4.37 times less risky than AmeraMex International. It trades about 0.22 of its potential returns per unit of risk. AmeraMex International is currently generating about -0.12 per unit of risk. If you would invest 17,346 in Alamo Group on August 30, 2024 and sell it today you would earn a total of 2,443 from holding Alamo Group or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. AmeraMex International
Performance |
| Timeline |
| Alamo Group |
| AmeraMex International |
Alamo and AmeraMex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and AmeraMex International
The main advantage of trading using opposite Alamo and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo 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 Alamo Group 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.| AmeraMex International vs. Buhler Industries | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Grow Solutions Holdings | AmeraMex International vs. American Premium Water |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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