Correlation Between Astec Industries and AGCO

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

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

Diversification Opportunities for Astec Industries and AGCO

0.14

Correlation Coefficient

Astec Industries  AGCO

Average diversification

The 3 months correlation between Astec and AGCO is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Astec Industries 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 Astec Industries 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 Astec Industries i.e., Astec Industries and AGCO go up and down completely randomly.

Pair Corralation between Astec Industries and AGCO

Given the investment horizon of 90 days Astec Industries is expected to generate 1.05 times more return on investment than AGCO. However, Astec Industries is 1.05 times more volatile than AGCO Corporation. It trades about 0.06 of its potential returns per unit of risk. AGCO Corporation is currently generating about 0.05 per unit of risk. If you would invest  3,299  in Astec Industries on December 28, 2024 and sell it today you would earn a total of  292.00  from holding Astec Industries or generate 8.85% return on investment over 90 days.

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

Astec Industries  vs.  AGCO Corp.

Astec Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astec Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Astec Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AGCO

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGCO Corporation are ranked lower than 4 (%) 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.

Pair Trading with Astec Industries and AGCO

The main advantage of trading using opposite Astec Industries and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astec Industries 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 Astec Industries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.