Correlation Between CRH Plc and Holcim
Can any of the company-specific risk be diversified away by investing in both CRH Plc 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 CRH Plc and Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRH Plc and Holcim, you can compare the effects of market volatilities on CRH Plc 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 CRH Plc with a short position of Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRH Plc and Holcim.
Diversification Opportunities for CRH Plc and Holcim
Excellent diversification
The 3 months correlation between CRH and Holcim is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CRH Plc and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim 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 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 CRH Plc i.e., CRH Plc and Holcim go up and down completely randomly.
Pair Corralation between CRH Plc and Holcim
Assuming the 90 days horizon CRH Plc is expected to generate 0.62 times more return on investment than Holcim. However, CRH Plc is 1.62 times less risky than Holcim. It trades about 0.16 of its potential returns per unit of risk. Holcim is currently generating about 0.07 per unit of risk. If you would invest 4,511 in CRH Plc on October 25, 2024 and sell it today you would earn a total of 1,341 from holding CRH Plc or generate 29.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 27.21% |
| Values | Daily Returns |
CRH Plc vs. Holcim
Performance |
| Timeline |
| CRH Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Holcim |
CRH Plc and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRH Plc and Holcim
The main advantage of trading using opposite CRH Plc and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH Plc 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.| CRH Plc vs. Cementos Pacasmayo SAA | CRH Plc vs. Summit Materials | CRH Plc vs. Eagle Materials | CRH Plc vs. CRH PLC 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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