Correlation Between ACS Actividades and Limbach Holdings

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

By analyzing existing cross correlation between ACS Actividades De and Limbach Holdings, you can compare the effects of market volatilities on ACS Actividades and Limbach Holdings 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 ACS Actividades with a short position of Limbach Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACS Actividades and Limbach Holdings.

Diversification Opportunities for ACS Actividades and Limbach Holdings

-0.09

Correlation Coefficient

ACS Actividades  Limbach Holdings

Good diversification

The 3 months correlation between ACS and Limbach is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ACS Actividades De and Limbach Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Limbach Holdings and ACS Actividades 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 ACS Actividades De are associated (or correlated) with Limbach Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Limbach Holdings has no effect on the direction of ACS Actividades i.e., ACS Actividades and Limbach Holdings go up and down completely randomly.

Pair Corralation between ACS Actividades and Limbach Holdings

Assuming the 90 days horizon ACS Actividades is expected to generate 17.54 times less return on investment than Limbach Holdings. But when comparing it to its historical volatility, ACS Actividades De is 2.54 times less risky than Limbach Holdings. It trades about 0.05 of its potential returns per unit of risk. Limbach Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  7,358  in Limbach Holdings on September 5, 2024 and sell it today you would earn a total of  2,919  from holding Limbach Holdings or generate 39.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ACS Actividades De  vs.  Limbach Holdings

ACS Actividades De

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades De are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ACS Actividades may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Limbach Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Limbach Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile primary indicators, Limbach Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACS Actividades and Limbach Holdings

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

The idea behind ACS Actividades De and Limbach Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.