Correlation Between Limbach Holdings and Aenza SAA
Can any of the company-specific risk be diversified away by investing in both Limbach Holdings and Aenza SAA 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 Limbach Holdings and Aenza SAA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Limbach Holdings and Aenza SAA, you can compare the effects of market volatilities on Limbach Holdings and Aenza SAA 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 Limbach Holdings with a short position of Aenza SAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Limbach Holdings and Aenza SAA.
Diversification Opportunities for Limbach Holdings and Aenza SAA
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Limbach and Aenza is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Limbach Holdings and Aenza SAA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aenza SAA and Limbach Holdings 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 Limbach Holdings are associated (or correlated) with Aenza SAA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aenza SAA has no effect on the direction of Limbach Holdings i.e., Limbach Holdings and Aenza SAA go up and down completely randomly.
Pair Corralation between Limbach Holdings and Aenza SAA
Considering the 90-day investment horizon Limbach Holdings is expected to generate 0.86 times more return on investment than Aenza SAA. However, Limbach Holdings is 1.17 times less risky than Aenza SAA. It trades about 0.13 of its potential returns per unit of risk. Aenza SAA is currently generating about -0.02 per unit of risk. If you would invest 1,214 in Limbach Holdings on August 29, 2024 and sell it today you would earn a total of 8,989 from holding Limbach Holdings or generate 740.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.52% |
| Values | Daily Returns |
Limbach Holdings vs. Aenza SAA
Performance |
| Timeline |
| Limbach Holdings |
| Aenza SAA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Limbach Holdings and Aenza SAA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Limbach Holdings and Aenza SAA
The main advantage of trading using opposite Limbach Holdings and Aenza SAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Limbach Holdings position performs unexpectedly, Aenza SAA 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 Aenza SAA will offset losses from the drop in Aenza SAA's long position.| Limbach Holdings vs. MYR Group | Limbach Holdings vs. Granite Construction Incorporated | Limbach Holdings vs. Construction Partners | Limbach Holdings vs. Great Lakes Dredge |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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