Correlation Between Lafargeholcim and China National
Can any of the company-specific risk be diversified away by investing in both Lafargeholcim and China National 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 Lafargeholcim and China National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lafargeholcim Ltd ADR and China National Building, you can compare the effects of market volatilities on Lafargeholcim and China National 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 Lafargeholcim with a short position of China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lafargeholcim and China National.
Diversification Opportunities for Lafargeholcim and China National
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lafargeholcim and China is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR and China National Building in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Building and Lafargeholcim 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 Lafargeholcim Ltd ADR are associated (or correlated) with China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Building has no effect on the direction of Lafargeholcim i.e., Lafargeholcim and China National go up and down completely randomly.
Pair Corralation between Lafargeholcim and China National
Assuming the 90 days horizon Lafargeholcim Ltd ADR is expected to generate 0.27 times more return on investment than China National. However, Lafargeholcim Ltd ADR is 3.76 times less risky than China National. It trades about 0.12 of its potential returns per unit of risk. China National Building is currently generating about -0.01 per unit of risk. If you would invest 965.00 in Lafargeholcim Ltd ADR on August 30, 2024 and sell it today you would earn a total of 1,041 from holding Lafargeholcim Ltd ADR or generate 107.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.45% |
| Values | Daily Returns |
Lafargeholcim Ltd ADR vs. China National Building
Performance |
| Timeline |
| Lafargeholcim ADR |
| China National Building |
Lafargeholcim and China National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lafargeholcim and China National
The main advantage of trading using opposite Lafargeholcim and China National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim position performs unexpectedly, China National 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 China National will offset losses from the drop in China National's long position.| Lafargeholcim vs. Xinyi Glass Holdings | Lafargeholcim vs. CEMATRIX | Lafargeholcim vs. CEMEX SAB de | Lafargeholcim vs. China National Building |
| China National vs. Anhui Conch Cement | China National vs. Buzzi Unicem SpA | China National vs. Wienerberger Baustoffindustrie | China National 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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