Correlation Between Alamo and Ag Growth

Can any of the company-specific risk be diversified away by investing in both Alamo and Ag Growth 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 Ag Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alamo Group and Ag Growth International, you can compare the effects of market volatilities on Alamo and Ag Growth 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 Ag Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Ag Growth.

Diversification Opportunities for Alamo and Ag Growth

-0.14

Correlation Coefficient

Alamo  Ag Growth

Good diversification

The 3 months correlation between Alamo and AGGZF is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Ag Growth International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ag Growth International 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 Ag Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ag Growth International has no effect on the direction of Alamo i.e., Alamo and Ag Growth go up and down completely randomly.

Pair Corralation between Alamo and Ag Growth

Considering the 90-day investment horizon Alamo Group is expected to generate 1.14 times more return on investment than Ag Growth. However, Alamo is 1.14 times more volatile than Ag Growth International. It trades about 0.1 of its potential returns per unit of risk. Ag Growth International is currently generating about -0.06 per unit of risk. If you would invest  17,864  in Alamo Group on August 31, 2024 and sell it today you would earn a total of  2,131  from holding Alamo Group or generate 11.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Alamo Group  vs.  Ag Growth International

Alamo Group

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Alamo may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ag Growth International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ag Growth International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Alamo and Ag Growth

The main advantage of trading using opposite Alamo and Ag Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamo position performs unexpectedly, Ag Growth 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 Ag Growth will offset losses from the drop in Ag Growth's long position.

The idea behind Alamo Group and Ag Growth International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.