Correlation Between James Hardie and Holcim
Can any of the company-specific risk be diversified away by investing in both James Hardie 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 James Hardie and Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between James Hardie Industries and Holcim, you can compare the effects of market volatilities on James Hardie 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 James Hardie with a short position of Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Hardie and Holcim.
Diversification Opportunities for James Hardie and Holcim
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between James and Holcim is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding James Hardie Industries and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim and James Hardie 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 James Hardie Industries 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 James Hardie i.e., James Hardie and Holcim go up and down completely randomly.
Pair Corralation between James Hardie and Holcim
Considering the 90-day investment horizon James Hardie Industries is expected to generate 1.88 times more return on investment than Holcim. However, James Hardie is 1.88 times more volatile than Holcim. It trades about 0.25 of its potential returns per unit of risk. Holcim is currently generating about -0.14 per unit of risk. If you would invest 3,146 in James Hardie Industries on October 20, 2024 and sell it today you would earn a total of 237.00 from holding James Hardie Industries or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
James Hardie Industries vs. Holcim
Performance |
| Timeline |
| James Hardie Industries |
| Holcim |
James Hardie and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with James Hardie and Holcim
The main advantage of trading using opposite James Hardie and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Hardie 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.| James Hardie vs. Loma Negra Compania | James Hardie vs. Summit Materials | James Hardie vs. United States Lime | James Hardie vs. Eagle Materials |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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