Correlation Between Buzzi Unicem and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both Buzzi Unicem 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 Buzzi Unicem and Lafargeholcim 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 Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on Buzzi Unicem 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 Buzzi Unicem with a short position of Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buzzi Unicem and Lafargeholcim.
Diversification Opportunities for Buzzi Unicem and Lafargeholcim
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buzzi and Lafargeholcim is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Buzzi Unicem SpA and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR 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 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 Buzzi Unicem i.e., Buzzi Unicem and Lafargeholcim go up and down completely randomly.
Pair Corralation between Buzzi Unicem and Lafargeholcim
Assuming the 90 days horizon Buzzi Unicem SpA is expected to generate 1.66 times more return on investment than Lafargeholcim. However, Buzzi Unicem is 1.66 times more volatile than Lafargeholcim Ltd ADR. It trades about 0.1 of its potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.12 per unit of risk. If you would invest 919.00 in Buzzi Unicem SpA on August 30, 2024 and sell it today you would earn a total of 1,181 from holding Buzzi Unicem SpA or generate 128.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.52% |
| Values | Daily Returns |
Buzzi Unicem SpA vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| Buzzi Unicem SpA |
| Lafargeholcim ADR |
Buzzi Unicem and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buzzi Unicem and Lafargeholcim
The main advantage of trading using opposite Buzzi Unicem and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buzzi Unicem 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.| Buzzi Unicem vs. Xinyi Glass Holdings | Buzzi Unicem vs. CEMATRIX | Buzzi Unicem vs. CEMEX SAB de | Buzzi Unicem 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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