Correlation Between Holcim and PPC
Can any of the company-specific risk be diversified away by investing in both Holcim and PPC 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 PPC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holcim and PPC Ltd ADR, you can compare the effects of market volatilities on Holcim and PPC 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 PPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holcim and PPC.
Diversification Opportunities for Holcim and PPC
Good diversification
The 3 months correlation between Holcim and PPC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Holcim and PPC Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPC Ltd 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 PPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPC Ltd ADR has no effect on the direction of Holcim i.e., Holcim and PPC go up and down completely randomly.
Pair Corralation between Holcim and PPC
Assuming the 90 days horizon Holcim is expected to generate 2.92 times less return on investment than PPC. But when comparing it to its historical volatility, Holcim is 3.89 times less risky than PPC. It trades about 0.07 of its potential returns per unit of risk. PPC Ltd ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 22.00 in PPC Ltd ADR on October 25, 2024 and sell it today you would earn a total of 11.00 from holding PPC Ltd ADR or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.72% |
| Values | Daily Returns |
Holcim vs. PPC Ltd ADR
Performance |
| Timeline |
| Holcim |
| PPC Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Holcim and PPC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holcim and PPC
The main advantage of trading using opposite Holcim and PPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holcim position performs unexpectedly, PPC 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 PPC will offset losses from the drop in PPC's long position.| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
| PPC vs. Wienerberger Baustoffindustrie | PPC vs. China National Building | PPC vs. Anhui Conch Cement | PPC vs. Lafargeholcim Ltd ADR |
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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