Correlation Between Austin Engineering and Alamo
Can any of the company-specific risk be diversified away by investing in both Austin Engineering and Alamo 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 Austin Engineering and Alamo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austin Engineering Limited and Alamo Group, you can compare the effects of market volatilities on Austin Engineering and Alamo 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 Austin Engineering with a short position of Alamo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austin Engineering and Alamo.
Diversification Opportunities for Austin Engineering and Alamo
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austin and Alamo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Austin Engineering Limited and Alamo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Group and Austin Engineering 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 Austin Engineering Limited are associated (or correlated) with Alamo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Group has no effect on the direction of Austin Engineering i.e., Austin Engineering and Alamo go up and down completely randomly.
Pair Corralation between Austin Engineering and Alamo
Assuming the 90 days horizon Austin Engineering Limited is expected to generate 2.62 times more return on investment than Alamo. However, Austin Engineering is 2.62 times more volatile than Alamo Group. It trades about 0.04 of its potential returns per unit of risk. Alamo Group is currently generating about 0.05 per unit of risk. If you would invest 22.00 in Austin Engineering Limited on August 26, 2024 and sell it today you would earn a total of 8.00 from holding Austin Engineering Limited or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austin Engineering Limited vs. Alamo Group
Performance |
| Timeline |
| Austin Engineering |
| Alamo Group |
Austin Engineering and Alamo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austin Engineering and Alamo
The main advantage of trading using opposite Austin Engineering and Alamo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austin Engineering position performs unexpectedly, Alamo 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 Alamo will offset losses from the drop in Alamo's long position.| Austin Engineering vs. Lion Electric Corp | Austin Engineering vs. Nikola Corp | Austin Engineering vs. Buhler Industries | Austin Engineering vs. Toyota Industries |
| Alamo vs. Hyster Yale Materials Handling | Alamo vs. Columbus McKinnon | Alamo vs. AGCO Corporation | Alamo vs. Titan International |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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