Correlation Between Alamo and Hyster Yale

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

By analyzing existing cross correlation between Alamo Group and Hyster Yale Materials Handling, you can compare the effects of market volatilities on Alamo and Hyster Yale 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 Alamo with a short position of Hyster Yale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamo and Hyster Yale.

Diversification Opportunities for Alamo and Hyster Yale

-0.84

Correlation Coefficient

Alamo  Hyster Yale

Pay attention - limited upside

The 3 months correlation between Alamo and Hyster is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alamo Group and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials and Alamo 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 Alamo Group are associated (or correlated) with Hyster Yale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Alamo i.e., Alamo and Hyster Yale go up and down completely randomly.

Pair Corralation between Alamo and Hyster Yale

Considering the 90-day investment horizon Alamo Group is expected to generate 0.72 times more return on investment than Hyster Yale. However, Alamo Group is 1.38 times less risky than Hyster Yale. It trades about 0.16 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about -0.19 per unit of risk. If you would invest  17,188  in Alamo Group on September 19, 2024 and sell it today you would earn a total of  2,541  from holding Alamo Group or generate 14.78% return on investment over 90 days.

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

Alamo Group  vs.  Hyster Yale Materials Handling

Alamo Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alamo Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Alamo may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alamo and Hyster Yale

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

The idea behind Alamo Group and Hyster Yale Materials Handling 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.