Correlation Between AmeraMex International and AGCO

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

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

Diversification Opportunities for AmeraMex International and AGCO

-0.46

Correlation Coefficient

AmeraMex International  AGCO

Very good diversification

The 3 months correlation between AmeraMex and AGCO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and AmeraMex International 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 AmeraMex International are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of AmeraMex International i.e., AmeraMex International and AGCO go up and down completely randomly.

Pair Corralation between AmeraMex International and AGCO

Given the investment horizon of 90 days AmeraMex International is expected to under-perform the AGCO. In addition to that, AmeraMex International is 4.19 times more volatile than AGCO Corporation. It trades about -0.05 of its total potential returns per unit of risk. AGCO Corporation is currently generating about 0.05 per unit of volatility. If you would invest  9,242  in AGCO Corporation on September 17, 2024 and sell it today you would earn a total of  470.00  from holding AGCO Corporation or generate 5.09% return on investment over 90 days.

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

AmeraMex International  vs.  AGCO Corp.

AmeraMex International

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AGCO

Risk-Adjusted Performance

3 of 100

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 healthy fundamental indicators, AGCO is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AmeraMex International and AGCO

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

The idea behind AmeraMex International and AGCO Corporation 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.