Correlation Between Alamo and AB Volvo

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

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

Diversification Opportunities for Alamo and AB Volvo

-0.82

Correlation Coefficient

Alamo  AB Volvo

Pay attention - limited upside

The 3 months correlation between Alamo and VOLAF is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Alamo i.e., Alamo and AB Volvo go up and down completely randomly.

Pair Corralation between Alamo and AB Volvo

If you would invest  19,349  in Alamo Group on September 18, 2024 and sell it today you would earn a total of  124.50  from holding Alamo Group or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Alamo Group  vs.  AB Volvo

Alamo Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Alamo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AB Volvo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Volvo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AB Volvo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alamo and AB Volvo

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

The idea behind Alamo Group and AB Volvo 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 CEOs Directory module to screen CEOs from public companies around the world.