Correlation Between Astec Industries and Komatsu

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

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

Diversification Opportunities for Astec Industries and Komatsu

0.15

Correlation Coefficient

Astec Industries  Komatsu

Average diversification

The 3 months correlation between Astec and Komatsu is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Astec Industries and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Astec Industries i.e., Astec Industries and Komatsu go up and down completely randomly.

Pair Corralation between Astec Industries and Komatsu

Given the investment horizon of 90 days Astec Industries is expected to generate 6.17 times less return on investment than Komatsu. In addition to that, Astec Industries is 1.58 times more volatile than Komatsu. It trades about 0.0 of its total potential returns per unit of risk. Komatsu is currently generating about 0.03 per unit of volatility. If you would invest  2,304  in Komatsu on October 4, 2024 and sell it today you would earn a total of  428.00  from holding Komatsu or generate 18.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Astec Industries  vs.  Komatsu

Astec Industries

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Astec Industries are ranked lower than 4 (%) 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 February 2025.

Komatsu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Astec Industries and Komatsu

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

The idea behind Astec Industries and Komatsu 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.