Correlation Between Anhui Conch and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both Anhui Conch and Lafargeholcim 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 Lafargeholcim 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 Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on Anhui Conch and Lafargeholcim 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 Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Conch and Lafargeholcim.
Diversification Opportunities for Anhui Conch and Lafargeholcim
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anhui and Lafargeholcim is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR 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 Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of Anhui Conch i.e., Anhui Conch and Lafargeholcim go up and down completely randomly.
Pair Corralation between Anhui Conch and Lafargeholcim
Assuming the 90 days horizon Anhui Conch Cement is expected to under-perform the Lafargeholcim. In addition to that, Anhui Conch is 1.86 times more volatile than Lafargeholcim Ltd ADR. It trades about -0.01 of its total potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.12 per unit of volatility. If you would invest 965.00 in Lafargeholcim Ltd ADR on August 30, 2024 and sell it today you would earn a total of 1,041 from holding Lafargeholcim Ltd ADR or generate 107.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anhui Conch Cement vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| Anhui Conch Cement |
| Lafargeholcim ADR |
Anhui Conch and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Conch and Lafargeholcim
The main advantage of trading using opposite Anhui Conch and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Conch position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim's long position.| Anhui Conch vs. Xinyi Glass Holdings | Anhui Conch vs. CEMATRIX | Anhui Conch vs. CEMEX SAB de | Anhui Conch vs. China National Building |
| Lafargeholcim vs. Xinyi Glass Holdings | Lafargeholcim vs. CEMATRIX | Lafargeholcim vs. CEMEX SAB de | Lafargeholcim vs. China National Building |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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