Correlation Between Lafargeholcim and Holcim
Can any of the company-specific risk be diversified away by investing in both Lafargeholcim 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 Lafargeholcim and Holcim 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 Holcim, you can compare the effects of market volatilities on Lafargeholcim 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 Lafargeholcim with a short position of Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lafargeholcim and Holcim.
Diversification Opportunities for Lafargeholcim and Holcim
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lafargeholcim and Holcim is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim 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 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 Lafargeholcim i.e., Lafargeholcim and Holcim go up and down completely randomly.
Pair Corralation between Lafargeholcim and Holcim
Assuming the 90 days horizon Lafargeholcim Ltd ADR is expected to generate 0.69 times more return on investment than Holcim. However, Lafargeholcim Ltd ADR is 1.44 times less risky than Holcim. It trades about 0.1 of its potential returns per unit of risk. Holcim is currently generating about 0.07 per unit of risk. If you would invest 1,741 in Lafargeholcim Ltd ADR on August 26, 2024 and sell it today you would earn a total of 286.00 from holding Lafargeholcim Ltd ADR or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lafargeholcim Ltd ADR vs. Holcim
Performance |
| Timeline |
| Lafargeholcim ADR |
| Holcim |
Lafargeholcim and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lafargeholcim and Holcim
The main advantage of trading using opposite Lafargeholcim and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim 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.| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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