Correlation Between HeidelbergCement and CRH PLC
Can any of the company-specific risk be diversified away by investing in both HeidelbergCement and CRH PLC 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 HeidelbergCement and CRH PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeidelbergCement AG ADR and CRH PLC ADR, you can compare the effects of market volatilities on HeidelbergCement and CRH PLC 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 HeidelbergCement with a short position of CRH PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeidelbergCement and CRH PLC.
Diversification Opportunities for HeidelbergCement and CRH PLC
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HeidelbergCement and CRH is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding HeidelbergCement AG ADR and CRH PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH PLC ADR and HeidelbergCement 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 HeidelbergCement AG ADR are associated (or correlated) with CRH PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRH PLC ADR has no effect on the direction of HeidelbergCement i.e., HeidelbergCement and CRH PLC go up and down completely randomly.
Pair Corralation between HeidelbergCement and CRH PLC
Assuming the 90 days horizon HeidelbergCement AG ADR is expected to generate 0.92 times more return on investment than CRH PLC. However, HeidelbergCement AG ADR is 1.08 times less risky than CRH PLC. It trades about 0.12 of its potential returns per unit of risk. CRH PLC ADR is currently generating about 0.11 per unit of risk. If you would invest 1,700 in HeidelbergCement AG ADR on September 12, 2024 and sell it today you would earn a total of 891.00 from holding HeidelbergCement AG ADR or generate 52.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
HeidelbergCement AG ADR vs. CRH PLC ADR
Performance |
| Timeline |
| HeidelbergCement AG ADR |
| CRH PLC ADR |
HeidelbergCement and CRH PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HeidelbergCement and CRH PLC
The main advantage of trading using opposite HeidelbergCement and CRH PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeidelbergCement position performs unexpectedly, CRH PLC 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 CRH PLC will offset losses from the drop in CRH PLC's long position.| HeidelbergCement vs. CRH PLC ADR | HeidelbergCement vs. Holcim | HeidelbergCement vs. Lafargeholcim Ltd ADR | HeidelbergCement vs. Vulcan Materials |
| CRH PLC vs. Martin Marietta Materials | CRH PLC vs. Eagle Materials | CRH PLC vs. Summit Materials | CRH PLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |