Correlation Between Lafargeholcim and ReTo Eco
Can any of the company-specific risk be diversified away by investing in both Lafargeholcim and ReTo Eco 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 ReTo Eco 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 ReTo Eco Solutions, you can compare the effects of market volatilities on Lafargeholcim and ReTo Eco 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 ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lafargeholcim and ReTo Eco.
Diversification Opportunities for Lafargeholcim and ReTo Eco
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lafargeholcim and ReTo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Lafargeholcim i.e., Lafargeholcim and ReTo Eco go up and down completely randomly.
Pair Corralation between Lafargeholcim and ReTo Eco
Assuming the 90 days horizon Lafargeholcim Ltd ADR is expected to generate 0.25 times more return on investment than ReTo Eco. However, Lafargeholcim Ltd ADR is 4.03 times less risky than ReTo Eco. It trades about 0.06 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about 0.0 per unit of risk. If you would invest 1,979 in Lafargeholcim Ltd ADR on August 30, 2024 and sell it today you would earn a total of 27.00 from holding Lafargeholcim Ltd ADR or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lafargeholcim Ltd ADR vs. ReTo Eco Solutions
Performance |
| Timeline |
| Lafargeholcim ADR |
| ReTo Eco Solutions |
Lafargeholcim and ReTo Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lafargeholcim and ReTo Eco
The main advantage of trading using opposite Lafargeholcim and ReTo Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim position performs unexpectedly, ReTo Eco 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 ReTo Eco will offset losses from the drop in ReTo Eco's long position.| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
| ReTo Eco vs. Martin Marietta Materials | ReTo Eco vs. Vulcan Materials | ReTo Eco vs. Summit Materials | ReTo Eco vs. United States Lime |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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