Correlation Between Anhui Conch and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Anhui Conch and Eagle Materials 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 Anhui Conch and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anhui Conch Cement and Eagle Materials, you can compare the effects of market volatilities on Anhui Conch and Eagle Materials 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 Anhui Conch with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Conch and Eagle Materials.
Diversification Opportunities for Anhui Conch and Eagle Materials
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anhui and Eagle is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and Anhui Conch 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 Anhui Conch Cement are associated (or correlated) with Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Anhui Conch i.e., Anhui Conch and Eagle Materials go up and down completely randomly.
Pair Corralation between Anhui Conch and Eagle Materials
Assuming the 90 days horizon Anhui Conch is expected to generate 1.02 times less return on investment than Eagle Materials. In addition to that, Anhui Conch is 2.57 times more volatile than Eagle Materials. It trades about 0.06 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.17 per unit of volatility. If you would invest 28,255 in Eagle Materials on August 26, 2024 and sell it today you would earn a total of 3,180 from holding Eagle Materials or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anhui Conch Cement vs. Eagle Materials
Performance |
| Timeline |
| Anhui Conch Cement |
| Eagle Materials |
Anhui Conch and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Conch and Eagle Materials
The main advantage of trading using opposite Anhui Conch and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Conch position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Anhui Conch vs. Buzzi Unicem SpA | Anhui Conch vs. Wienerberger Baustoffindustrie | Anhui Conch vs. Lafargeholcim Ltd ADR | Anhui Conch vs. HeidelbergCement AG ADR |
| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. CRH PLC ADR | Eagle Materials vs. Summit Materials | Eagle Materials vs. Cemex SAB de |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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