Correlation Between Buzzi Unicem and James Hardie
Can any of the company-specific risk be diversified away by investing in both Buzzi Unicem and James Hardie 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 James Hardie 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 James Hardie Industries, you can compare the effects of market volatilities on Buzzi Unicem and James Hardie 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 James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buzzi Unicem and James Hardie.
Diversification Opportunities for Buzzi Unicem and James Hardie
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buzzi and James is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Buzzi Unicem SpA and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries 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 James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Buzzi Unicem i.e., Buzzi Unicem and James Hardie go up and down completely randomly.
Pair Corralation between Buzzi Unicem and James Hardie
Assuming the 90 days horizon Buzzi Unicem SpA is expected to generate 0.68 times more return on investment than James Hardie. However, Buzzi Unicem SpA is 1.47 times less risky than James Hardie. It trades about 0.06 of its potential returns per unit of risk. James Hardie Industries is currently generating about -0.01 per unit of risk. If you would invest 1,685 in Buzzi Unicem SpA on November 3, 2024 and sell it today you would earn a total of 365.00 from holding Buzzi Unicem SpA or generate 21.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.18% |
| Values | Daily Returns |
Buzzi Unicem SpA vs. James Hardie Industries
Performance |
| Timeline |
| Buzzi Unicem SpA |
| James Hardie Industries |
Buzzi Unicem and James Hardie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buzzi Unicem and James Hardie
The main advantage of trading using opposite Buzzi Unicem and James Hardie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buzzi Unicem position performs unexpectedly, James Hardie 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 James Hardie will offset losses from the drop in James Hardie'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 |
| James Hardie vs. Loma Negra Compania | James Hardie vs. Summit Materials | James Hardie vs. United States Lime | James Hardie vs. Eagle Materials |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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