Correlation Between Loma Negra and James Hardie
Can any of the company-specific risk be diversified away by investing in both Loma Negra and James Hardie 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 James Hardie 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 James Hardie Industries, you can compare the effects of market volatilities on Loma Negra and James Hardie 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 James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and James Hardie.
Diversification Opportunities for Loma Negra and James Hardie
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Loma and James is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries 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 James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Loma Negra i.e., Loma Negra and James Hardie go up and down completely randomly.
Pair Corralation between Loma Negra and James Hardie
Given the investment horizon of 90 days Loma Negra Compania is expected to generate 1.08 times more return on investment than James Hardie. However, Loma Negra is 1.08 times more volatile than James Hardie Industries. It trades about 0.42 of its potential returns per unit of risk. James Hardie Industries is currently generating about 0.05 per unit of risk. If you would invest 810.00 in Loma Negra Compania on August 23, 2024 and sell it today you would earn a total of 231.00 from holding Loma Negra Compania or generate 28.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loma Negra Compania vs. James Hardie Industries
Performance |
| Timeline |
| Loma Negra Compania |
| James Hardie Industries |
Loma Negra and James Hardie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loma Negra and James Hardie
The main advantage of trading using opposite Loma Negra and James Hardie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra position performs unexpectedly, James Hardie 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 James Hardie will offset losses from the drop in James Hardie'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 |
| James Hardie vs. Loma Negra Compania | James Hardie vs. Summit Materials | James Hardie vs. United States Lime | James Hardie vs. Eagle Materials |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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