Correlation Between Astec Industries and CEA Industries
Can any of the company-specific risk be diversified away by investing in both Astec Industries and CEA Industries 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 CEA Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astec Industries and CEA Industries, you can compare the effects of market volatilities on Astec Industries and CEA Industries 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 CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astec Industries and CEA Industries.
Diversification Opportunities for Astec Industries and CEA Industries
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astec and CEA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and CEA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries 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 CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries has no effect on the direction of Astec Industries i.e., Astec Industries and CEA Industries go up and down completely randomly.
Pair Corralation between Astec Industries and CEA Industries
Given the investment horizon of 90 days Astec Industries is expected to generate 0.66 times more return on investment than CEA Industries. However, Astec Industries is 1.53 times less risky than CEA Industries. It trades about 0.01 of its potential returns per unit of risk. CEA Industries is currently generating about -0.01 per unit of risk. If you would invest 4,044 in Astec Industries on August 24, 2024 and sell it today you would lose (219.00) from holding Astec Industries or give up 5.42% 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. CEA Industries
Performance |
| Timeline |
| Astec Industries |
| CEA Industries |
Astec Industries and CEA Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astec Industries and CEA Industries
The main advantage of trading using opposite Astec Industries and CEA Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries position performs unexpectedly, CEA Industries 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 CEA Industries will offset losses from the drop in CEA Industries' long position.| Astec Industries vs. Hyster Yale Materials Handling | Astec Industries vs. Manitex International | Astec Industries vs. Shyft Group | Astec Industries vs. Rev Group |
| CEA Industries vs. Rev Group | CEA Industries vs. Caterpillar | CEA Industries vs. Buhler Industries | CEA Industries vs. Austin Engineering Limited |
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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