Correlation Between Monarch Cement and China National
Can any of the company-specific risk be diversified away by investing in both Monarch Cement and China National 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 Monarch Cement and China National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Monarch Cement and China National Building, you can compare the effects of market volatilities on Monarch Cement and China National 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 Monarch Cement with a short position of China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monarch Cement and China National.
Diversification Opportunities for Monarch Cement and China National
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monarch and China is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Monarch Cement and China National Building in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Building and Monarch Cement 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 The Monarch Cement are associated (or correlated) with China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Building has no effect on the direction of Monarch Cement i.e., Monarch Cement and China National go up and down completely randomly.
Pair Corralation between Monarch Cement and China National
Given the investment horizon of 90 days The Monarch Cement is expected to generate 1.52 times more return on investment than China National. However, Monarch Cement is 1.52 times more volatile than China National Building. It trades about 0.2 of its potential returns per unit of risk. China National Building is currently generating about -0.09 per unit of risk. If you would invest 19,300 in The Monarch Cement on August 30, 2024 and sell it today you would earn a total of 2,549 from holding The Monarch Cement or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Monarch Cement vs. China National Building
Performance |
| Timeline |
| Monarch Cement |
| China National Building |
Monarch Cement and China National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monarch Cement and China National
The main advantage of trading using opposite Monarch Cement and China National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monarch Cement position performs unexpectedly, China National 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 China National will offset losses from the drop in China National's long position.| Monarch Cement vs. Eagle Materials | Monarch Cement vs. Summit Materials | Monarch Cement vs. Cementos Pacasmayo SAA | Monarch Cement vs. Loma Negra Compania |
| China National vs. Anhui Conch Cement | China National vs. Buzzi Unicem SpA | China National vs. Wienerberger Baustoffindustrie | China National vs. Lafargeholcim Ltd ADR |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |