Correlation Between Lafargeholcim and Xinyi Glass
Can any of the company-specific risk be diversified away by investing in both Lafargeholcim and Xinyi Glass 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 Xinyi Glass 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 Xinyi Glass Holdings, you can compare the effects of market volatilities on Lafargeholcim and Xinyi Glass 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 Xinyi Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lafargeholcim and Xinyi Glass.
Diversification Opportunities for Lafargeholcim and Xinyi Glass
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lafargeholcim and Xinyi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR and Xinyi Glass Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Glass Holdings 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 Xinyi Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Glass Holdings has no effect on the direction of Lafargeholcim i.e., Lafargeholcim and Xinyi Glass go up and down completely randomly.
Pair Corralation between Lafargeholcim and Xinyi Glass
Assuming the 90 days horizon Lafargeholcim is expected to generate 10.07 times less return on investment than Xinyi Glass. But when comparing it to its historical volatility, Lafargeholcim Ltd ADR is 12.16 times less risky than Xinyi Glass. It trades about 0.1 of its potential returns per unit of risk. Xinyi Glass Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Xinyi Glass Holdings on November 5, 2024 and sell it today you would earn a total of 46.00 from holding Xinyi Glass Holdings or generate 97.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.44% |
| Values | Daily Returns |
Lafargeholcim Ltd ADR vs. Xinyi Glass Holdings
Performance |
| Timeline |
| Lafargeholcim ADR |
| Xinyi Glass Holdings |
Lafargeholcim and Xinyi Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lafargeholcim and Xinyi Glass
The main advantage of trading using opposite Lafargeholcim and Xinyi Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim position performs unexpectedly, Xinyi Glass 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 Xinyi Glass will offset losses from the drop in Xinyi Glass' long position.| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
| Xinyi Glass vs. Anhui Conch Cement | Xinyi Glass vs. CEMEX SAB de | Xinyi Glass vs. CEMATRIX | Xinyi Glass vs. Anhui Conch Cement |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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