Correlation Between Alamo and Palfinger
Can any of the company-specific risk be diversified away by investing in both Alamo and Palfinger 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 Palfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamo Group and Palfinger AG, you can compare the effects of market volatilities on Alamo and Palfinger 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 Palfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Palfinger.
Diversification Opportunities for Alamo and Palfinger
Very good diversification
The 3 months correlation between Alamo and Palfinger is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Palfinger AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palfinger AG 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 Palfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palfinger AG has no effect on the direction of Alamo i.e., Alamo and Palfinger go up and down completely randomly.
Pair Corralation between Alamo and Palfinger
Considering the 90-day investment horizon Alamo Group is expected to generate 1.49 times more return on investment than Palfinger. However, Alamo is 1.49 times more volatile than Palfinger AG. It trades about 0.04 of its potential returns per unit of risk. Palfinger AG is currently generating about -0.05 per unit of risk. If you would invest 16,822 in Alamo Group on September 3, 2024 and sell it today you would earn a total of 3,373 from holding Alamo Group or generate 20.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.68% |
| Values | Daily Returns |
Alamo Group vs. Palfinger AG
Performance |
| Timeline |
| Alamo Group |
| Palfinger AG |
Alamo and Palfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alamo and Palfinger
The main advantage of trading using opposite Alamo and Palfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Palfinger 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 Palfinger will offset losses from the drop in Palfinger's long position.| Alamo vs. Partner Communications | Alamo vs. Merck Company | Alamo vs. Western Midstream Partners | Alamo vs. Edgewise Therapeutics |
| Palfinger vs. NiSource | Palfinger vs. Neogen | Palfinger vs. Transportadora de Gas | Palfinger vs. RadNet Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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