Correlation Between Holcim and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both Holcim 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 Holcim and Lafargeholcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holcim and Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on Holcim 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 Holcim with a short position of Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holcim and Lafargeholcim.
Diversification Opportunities for Holcim and Lafargeholcim
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Holcim and Lafargeholcim is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Holcim and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim 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 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 Holcim i.e., Holcim and Lafargeholcim go up and down completely randomly.
Pair Corralation between Holcim and Lafargeholcim
Assuming the 90 days horizon Holcim is expected to generate 1.36 times more return on investment than Lafargeholcim. However, Holcim is 1.36 times more volatile than Lafargeholcim Ltd ADR. It trades about 0.11 of its potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.06 per unit of risk. If you would invest 9,803 in Holcim on August 30, 2024 and sell it today you would earn a total of 357.00 from holding Holcim or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holcim vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| Holcim |
| Lafargeholcim ADR |
Holcim and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holcim and Lafargeholcim
The main advantage of trading using opposite Holcim and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holcim 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.| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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