Correlation Between AGCO and AmeraMex International

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

By analyzing existing cross correlation between AGCO Corporation and AmeraMex International, you can compare the effects of market volatilities on AGCO 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 AGCO with a short position of AmeraMex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and AmeraMex International.

Diversification Opportunities for AGCO and AmeraMex International

-0.09

Correlation Coefficient

AGCO  AmeraMex International

Good diversification

The 3 months correlation between AGCO and AmeraMex is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and AmeraMex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmeraMex International and AGCO 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 AGCO Corporation 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 AGCO i.e., AGCO and AmeraMex International go up and down completely randomly.

Pair Corralation between AGCO and AmeraMex International

Given the investment horizon of 90 days AGCO Corporation is expected to generate 0.66 times more return on investment than AmeraMex International. However, AGCO Corporation is 1.52 times less risky than AmeraMex International. It trades about 0.04 of its potential returns per unit of risk. AmeraMex International is currently generating about 0.0 per unit of risk. If you would invest  9,291  in AGCO Corporation on December 27, 2024 and sell it today you would earn a total of  437.00  from holding AGCO Corporation or generate 4.7% return on investment over 90 days.

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

AGCO Corp.  vs.  AmeraMex International

AGCO

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGCO Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, AGCO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AmeraMex International

Risk-Adjusted Performance

Very Weak

Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, AmeraMex International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AGCO and AmeraMex International

The main advantage of trading using opposite AGCO and AmeraMex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO 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.

The idea behind AGCO Corporation and AmeraMex 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.