Correlation Between Komatsu and AmeraMex International
Can any of the company-specific risk be diversified away by investing in both Komatsu 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 Komatsu and AmeraMex International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Komatsu and AmeraMex International, you can compare the effects of market volatilities on Komatsu 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 Komatsu with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Komatsu and AmeraMex International.
Diversification Opportunities for Komatsu and AmeraMex International
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Komatsu and AmeraMex is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Komatsu and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and Komatsu 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 Komatsu 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 Komatsu i.e., Komatsu and AmeraMex International go up and down completely randomly.
Pair Corralation between Komatsu and AmeraMex International
Assuming the 90 days horizon Komatsu is expected to generate 0.07 times more return on investment than AmeraMex International. However, Komatsu is 13.63 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 -0.14 per unit of risk. If you would invest 2,694 in Komatsu on September 13, 2024 and sell it today you would earn a total of 123.00 from holding Komatsu or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Komatsu vs. AmeraMex International
Performance |
| Timeline |
| Komatsu |
| AmeraMex International |
Komatsu and AmeraMex International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Komatsu and AmeraMex International
The main advantage of trading using opposite Komatsu and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Komatsu 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.| Komatsu vs. HUMANA INC | Komatsu vs. Barloworld Ltd ADR | Komatsu vs. Morningstar Unconstrained Allocation | Komatsu vs. Thrivent High Yield |
| AmeraMex International vs. First Tractor | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Arts Way Manufacturing Co | 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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