Correlation Between Buzzi Unicem and Holcim
Can any of the company-specific risk be diversified away by investing in both Buzzi Unicem and Holcim 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 Buzzi Unicem and Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buzzi Unicem SpA and Holcim, you can compare the effects of market volatilities on Buzzi Unicem and Holcim 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 Buzzi Unicem with a short position of Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buzzi Unicem and Holcim.
Diversification Opportunities for Buzzi Unicem and Holcim
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buzzi and Holcim is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Buzzi Unicem SpA and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim and Buzzi Unicem 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 Buzzi Unicem SpA are associated (or correlated) with Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of Buzzi Unicem i.e., Buzzi Unicem and Holcim go up and down completely randomly.
Pair Corralation between Buzzi Unicem and Holcim
Assuming the 90 days horizon Buzzi Unicem SpA is expected to under-perform the Holcim. In addition to that, Buzzi Unicem is 1.88 times more volatile than Holcim. It trades about -0.21 of its total potential returns per unit of risk. Holcim is currently generating about -0.11 per unit of volatility. If you would invest 10,000 in Holcim on October 20, 2024 and sell it today you would lose (425.00) from holding Holcim or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buzzi Unicem SpA vs. Holcim
Performance |
| Timeline |
| Buzzi Unicem SpA |
| Holcim |
Buzzi Unicem and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buzzi Unicem and Holcim
The main advantage of trading using opposite Buzzi Unicem and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buzzi Unicem position performs unexpectedly, Holcim 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 Holcim will offset losses from the drop in Holcim's long position.| Buzzi Unicem vs. China National Building | Buzzi Unicem vs. Anhui Conch Cement | Buzzi Unicem vs. Lafargeholcim Ltd ADR | Buzzi Unicem vs. HeidelbergCement AG ADR |
| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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