Correlation Between Anhui Conch and Smith Midland
Can any of the company-specific risk be diversified away by investing in both Anhui Conch and Smith Midland 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 Smith Midland 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 Smith Midland Corp, you can compare the effects of market volatilities on Anhui Conch and Smith Midland 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 Smith Midland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Conch and Smith Midland.
Diversification Opportunities for Anhui Conch and Smith Midland
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Anhui and Smith is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Smith Midland Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Midland Corp 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 Smith Midland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Midland Corp has no effect on the direction of Anhui Conch i.e., Anhui Conch and Smith Midland go up and down completely randomly.
Pair Corralation between Anhui Conch and Smith Midland
Assuming the 90 days horizon Anhui Conch is expected to generate 9.44 times less return on investment than Smith Midland. But when comparing it to its historical volatility, Anhui Conch Cement is 1.67 times less risky than Smith Midland. It trades about 0.02 of its potential returns per unit of risk. Smith Midland Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,788 in Smith Midland Corp on August 31, 2024 and sell it today you would earn a total of 3,122 from holding Smith Midland Corp or generate 174.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Anhui Conch Cement vs. Smith Midland Corp
Performance |
| Timeline |
| Anhui Conch Cement |
| Smith Midland Corp |
Anhui Conch and Smith Midland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Conch and Smith Midland
The main advantage of trading using opposite Anhui Conch and Smith Midland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Conch position performs unexpectedly, Smith Midland 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 Smith Midland will offset losses from the drop in Smith Midland's 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 |
| Smith Midland vs. United States Lime | Smith Midland vs. Holcim | Smith Midland vs. Lafargeholcim Ltd ADR | Smith Midland vs. Cementos Pacasmayo SAA |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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