Correlation Between Loma Negra and CRH PLC
Can any of the company-specific risk be diversified away by investing in both Loma Negra 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 Loma Negra and CRH PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loma Negra Compania and CRH PLC ADR, you can compare the effects of market volatilities on Loma Negra 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 Loma Negra with a short position of CRH PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and CRH PLC.
Diversification Opportunities for Loma Negra and CRH PLC
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Loma and CRH is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania 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 Loma Negra 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 Loma Negra Compania 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 Loma Negra i.e., Loma Negra and CRH PLC go up and down completely randomly.
Pair Corralation between Loma Negra and CRH PLC
Given the investment horizon of 90 days Loma Negra Compania is expected to generate 1.46 times more return on investment than CRH PLC. However, Loma Negra is 1.46 times more volatile than CRH PLC ADR. It trades about 0.11 of its potential returns per unit of risk. CRH PLC ADR is currently generating about 0.07 per unit of risk. If you would invest 657.00 in Loma Negra Compania on August 27, 2024 and sell it today you would earn a total of 391.00 from holding Loma Negra Compania or generate 59.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loma Negra Compania vs. CRH PLC ADR
Performance |
| Timeline |
| Loma Negra Compania |
| CRH PLC ADR |
Loma Negra and CRH PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loma Negra and CRH PLC
The main advantage of trading using opposite Loma Negra and CRH PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra 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.| Loma Negra vs. Holcim | Loma Negra vs. Lafargeholcim Ltd ADR | Loma Negra vs. Eagle Materials | Loma Negra vs. The Monarch Cement |
| CRH PLC vs. Holcim | CRH PLC vs. Lafargeholcim Ltd ADR | CRH PLC vs. Eagle Materials | CRH PLC vs. The Monarch 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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