Correlation Between CRH PLC and Anhui Conch
Can any of the company-specific risk be diversified away by investing in both CRH PLC and Anhui Conch 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 CRH PLC and Anhui Conch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRH PLC ADR and Anhui Conch Cement, you can compare the effects of market volatilities on CRH PLC and Anhui Conch 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 CRH PLC with a short position of Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRH PLC and Anhui Conch.
Diversification Opportunities for CRH PLC and Anhui Conch
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CRH and Anhui is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR and Anhui Conch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Conch Cement and CRH PLC 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 CRH PLC ADR are associated (or correlated) with Anhui Conch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Conch Cement has no effect on the direction of CRH PLC i.e., CRH PLC and Anhui Conch go up and down completely randomly.
Pair Corralation between CRH PLC and Anhui Conch
Considering the 90-day investment horizon CRH PLC is expected to generate 1.82 times less return on investment than Anhui Conch. But when comparing it to its historical volatility, CRH PLC ADR is 4.5 times less risky than Anhui Conch. It trades about 0.19 of its potential returns per unit of risk. Anhui Conch Cement is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 217.00 in Anhui Conch Cement on August 31, 2024 and sell it today you would earn a total of 43.00 from holding Anhui Conch Cement or generate 19.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CRH PLC ADR vs. Anhui Conch Cement
Performance |
Timeline |
CRH PLC ADR |
Anhui Conch Cement |
CRH PLC and Anhui Conch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CRH PLC and Anhui Conch
The main advantage of trading using opposite CRH PLC and Anhui Conch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH PLC position performs unexpectedly, Anhui Conch 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 Anhui Conch will offset losses from the drop in Anhui Conch's long position.CRH PLC vs. Martin Marietta Materials | CRH PLC vs. Eagle Materials | CRH PLC vs. Summit Materials | CRH PLC vs. United States Lime |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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