Correlation Between AmeraMex International and Austin Engineering

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

By analyzing existing cross correlation between AmeraMex International and Austin Engineering Limited, you can compare the effects of market volatilities on AmeraMex International and Austin Engineering 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 Austin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Austin Engineering.

Diversification Opportunities for AmeraMex International and Austin Engineering

0.5

Correlation Coefficient

AmeraMex International  Austin Engineering

Very weak diversification

The 3 months correlation between AmeraMex and Austin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Austin Engineering Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Engineering 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 Austin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Engineering has no effect on the direction of AmeraMex International i.e., AmeraMex International and Austin Engineering go up and down completely randomly.

Pair Corralation between AmeraMex International and Austin Engineering

Given the investment horizon of 90 days AmeraMex International is expected to generate 0.76 times more return on investment than Austin Engineering. However, AmeraMex International is 1.31 times less risky than Austin Engineering. It trades about 0.02 of its potential returns per unit of risk. Austin Engineering Limited is currently generating about -0.1 per unit of risk. If you would invest  20.00  in AmeraMex International on December 30, 2024 and sell it today you would earn a total of  0.00  from holding AmeraMex International or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

AmeraMex International  vs.  Austin Engineering Limited

AmeraMex International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmeraMex International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Austin Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days Austin Engineering Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AmeraMex International and Austin Engineering

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

The idea behind AmeraMex International and Austin Engineering Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.