Correlation Between Austin Engineering and Lindsay

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

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

Diversification Opportunities for Austin Engineering and Lindsay

-0.1

Correlation Coefficient

Austin Engineering  Lindsay

Good diversification

The 3 months correlation between Austin and Lindsay is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Austin Engineering Limited and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay and Austin Engineering 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 Austin Engineering Limited are associated (or correlated) with Lindsay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsay has no effect on the direction of Austin Engineering i.e., Austin Engineering and Lindsay go up and down completely randomly.

Pair Corralation between Austin Engineering and Lindsay

Assuming the 90 days horizon Austin Engineering Limited is expected to under-perform the Lindsay. In addition to that, Austin Engineering is 3.5 times more volatile than Lindsay. It trades about -0.11 of its total potential returns per unit of risk. Lindsay is currently generating about 0.12 per unit of volatility. If you would invest  11,821  in Lindsay on December 29, 2024 and sell it today you would earn a total of  1,277  from holding Lindsay or generate 10.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Austin Engineering Limited  vs.  Lindsay

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.

Lindsay

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsay are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lindsay may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Austin Engineering and Lindsay

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

The idea behind Austin Engineering Limited and Lindsay 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 Transaction History module to view history of all your transactions and understand their impact on performance.