Correlation Between Holcim and CRH PLC
Can any of the company-specific risk be diversified away by investing in both Holcim and CRH PLC 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 Holcim and CRH PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holcim and CRH PLC ADR, you can compare the effects of market volatilities on Holcim and CRH PLC 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 Holcim with a short position of CRH PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holcim and CRH PLC.
Diversification Opportunities for Holcim and CRH PLC
Poor diversification
The 3 months correlation between Holcim and CRH is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Holcim and CRH PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH PLC ADR and Holcim 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 Holcim are associated (or correlated) with CRH PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRH PLC ADR has no effect on the direction of Holcim i.e., Holcim and CRH PLC go up and down completely randomly.
Pair Corralation between Holcim and CRH PLC
Assuming the 90 days horizon Holcim is expected to generate 2.91 times less return on investment than CRH PLC. In addition to that, Holcim is 1.1 times more volatile than CRH PLC ADR. It trades about 0.06 of its total potential returns per unit of risk. CRH PLC ADR is currently generating about 0.19 per unit of volatility. If you would invest 8,807 in CRH PLC ADR on August 31, 2024 and sell it today you would earn a total of 1,387 from holding CRH PLC ADR or generate 15.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holcim vs. CRH PLC ADR
Performance |
| Timeline |
| Holcim |
| CRH PLC ADR |
Holcim and CRH PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holcim and CRH PLC
The main advantage of trading using opposite Holcim and CRH PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holcim position performs unexpectedly, CRH PLC 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 CRH PLC will offset losses from the drop in CRH PLC's long position.| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
| CRH PLC vs. Martin Marietta Materials | CRH PLC vs. Eagle Materials | CRH PLC vs. Summit Materials | CRH PLC vs. United States Lime |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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