Correlation Between Loma Negra and HeidelbergCement
Can any of the company-specific risk be diversified away by investing in both Loma Negra and HeidelbergCement 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 HeidelbergCement 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 HeidelbergCement AG ADR, you can compare the effects of market volatilities on Loma Negra and HeidelbergCement 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 HeidelbergCement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and HeidelbergCement.
Diversification Opportunities for Loma Negra and HeidelbergCement
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Loma and HeidelbergCement is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania and HeidelbergCement AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeidelbergCement AG 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 HeidelbergCement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeidelbergCement AG ADR has no effect on the direction of Loma Negra i.e., Loma Negra and HeidelbergCement go up and down completely randomly.
Pair Corralation between Loma Negra and HeidelbergCement
Given the investment horizon of 90 days Loma Negra Compania is expected to generate 1.46 times more return on investment than HeidelbergCement. However, Loma Negra is 1.46 times more volatile than HeidelbergCement AG ADR. It trades about 0.39 of its potential returns per unit of risk. HeidelbergCement AG ADR is currently generating about 0.31 per unit of risk. If you would invest 906.00 in Loma Negra Compania on August 31, 2024 and sell it today you would earn a total of 236.00 from holding Loma Negra Compania or generate 26.05% 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. HeidelbergCement AG ADR
Performance |
| Timeline |
| Loma Negra Compania |
| HeidelbergCement AG ADR |
Loma Negra and HeidelbergCement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loma Negra and HeidelbergCement
The main advantage of trading using opposite Loma Negra and HeidelbergCement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra position performs unexpectedly, HeidelbergCement 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 HeidelbergCement will offset losses from the drop in HeidelbergCement's long position.| Loma Negra vs. James Hardie Industries | Loma Negra vs. Summit Materials | Loma Negra vs. United States Lime | Loma Negra vs. Eagle Materials |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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