Correlation Between Lafargeholcim and PPC
Can any of the company-specific risk be diversified away by investing in both Lafargeholcim 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 Lafargeholcim and PPC 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 PPC Ltd ADR, you can compare the effects of market volatilities on Lafargeholcim 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 Lafargeholcim with a short position of PPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lafargeholcim and PPC.
Diversification Opportunities for Lafargeholcim and PPC
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lafargeholcim and PPC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR 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 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 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 Lafargeholcim i.e., Lafargeholcim and PPC go up and down completely randomly.
Pair Corralation between Lafargeholcim and PPC
If you would invest 1,950 in Lafargeholcim Ltd ADR on August 30, 2024 and sell it today you would earn a total of 56.00 from holding Lafargeholcim Ltd ADR or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 2.27% |
| Values | Daily Returns |
Lafargeholcim Ltd ADR vs. PPC Ltd ADR
Performance |
| Timeline |
| Lafargeholcim ADR |
| PPC Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lafargeholcim and PPC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lafargeholcim and PPC
The main advantage of trading using opposite Lafargeholcim and PPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim 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.| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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