Correlation Between Alamo and Komatsu
Can any of the company-specific risk be diversified away by investing in both Alamo and Komatsu 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 Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Komatsu, you can compare the effects of market volatilities on Alamo and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Komatsu.
Diversification Opportunities for Alamo and Komatsu
Modest diversification
The 3 months correlation between Alamo and Komatsu is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Alamo i.e., Alamo and Komatsu go up and down completely randomly.
Pair Corralation between Alamo and Komatsu
Considering the 90-day investment horizon Alamo Group is expected to generate 0.99 times more return on investment than Komatsu. However, Alamo Group is 1.01 times less risky than Komatsu. It trades about 0.29 of its potential returns per unit of risk. Komatsu is currently generating about 0.04 per unit of risk. If you would invest 16,954 in Alamo Group on September 1, 2024 and sell it today you would earn a total of 3,041 from holding Alamo Group or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alamo Group vs. Komatsu
Performance |
| Timeline |
| Alamo Group |
| Komatsu |
Alamo and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Komatsu
The main advantage of trading using opposite Alamo and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
| Komatsu vs. American Premium Water | Komatsu vs. Arts Way Manufacturing Co | Komatsu vs. Astec Industries | Komatsu vs. Alamo 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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