Correlation Between AmeraMex International and Lindsay

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

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

Diversification Opportunities for AmeraMex International and Lindsay

0.37

Correlation Coefficient

AmeraMex International  Lindsay

Weak diversification

The 3 months correlation between AmeraMex and Lindsay is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Lindsay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsay 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 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 AmeraMex International i.e., AmeraMex International and Lindsay go up and down completely randomly.

Pair Corralation between AmeraMex International and Lindsay

Given the investment horizon of 90 days AmeraMex International is expected to under-perform the Lindsay. In addition to that, AmeraMex International is 2.93 times more volatile than Lindsay. It trades about -0.03 of its total potential returns per unit of risk. Lindsay is currently generating about -0.02 per unit of volatility. If you would invest  12,110  in Lindsay on February 4, 2024 and sell it today you would lose (281.00) from holding Lindsay or give up 2.32% of portfolio value over 90 days.

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

AmeraMex International  vs.  Lindsay

AmeraMex International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmeraMex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lindsay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindsay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with AmeraMex International and Lindsay

The main advantage of trading using opposite AmeraMex International and Lindsay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International 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 AmeraMex International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.