Correlation Between Austin Engineering and Textainer Group

Can any of the company-specific risk be diversified away by investing in both Austin Engineering and Textainer Group 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 Textainer Group 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 Textainer Group Holdings, you can compare the effects of market volatilities on Austin Engineering and Textainer Group 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 Textainer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austin Engineering and Textainer Group.

Diversification Opportunities for Austin Engineering and Textainer Group

-0.43

Correlation Coefficient

Austin Engineering  Textainer Group

Very good diversification

The 3 months correlation between Austin and Textainer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Austin Engineering Limited and Textainer Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textainer Group Holdings 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 Textainer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textainer Group Holdings has no effect on the direction of Austin Engineering i.e., Austin Engineering and Textainer Group go up and down completely randomly.

Pair Corralation between Austin Engineering and Textainer Group

Assuming the 90 days horizon Austin Engineering Limited is expected to under-perform the Textainer Group. In addition to that, Austin Engineering is 1.75 times more volatile than Textainer Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. Textainer Group Holdings is currently generating about 0.08 per unit of volatility. If you would invest  74.00  in Textainer Group Holdings on September 1, 2024 and sell it today you would earn a total of  12.00  from holding Textainer Group Holdings or generate 16.22% return on investment over 90 days.

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

Austin Engineering Limited  vs.  Textainer Group Holdings

Austin Engineering

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Textainer Group Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Textainer Group Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Textainer Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austin Engineering and Textainer Group

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

The idea behind Austin Engineering Limited and Textainer Group Holdings 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.