Correlation Between PPC and Holcim
Can any of the company-specific risk be diversified away by investing in both PPC 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 PPC and Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PPC Ltd ADR and Holcim, you can compare the effects of market volatilities on PPC 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 PPC with a short position of Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPC and Holcim.
Diversification Opportunities for PPC and Holcim
Good diversification
The 3 months correlation between PPC and Holcim is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PPC Ltd ADR and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim and PPC 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 PPC Ltd ADR 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 PPC i.e., PPC and Holcim go up and down completely randomly.
Pair Corralation between PPC and Holcim
Assuming the 90 days horizon PPC Ltd ADR is expected to generate 4.93 times more return on investment than Holcim. However, PPC is 4.93 times more volatile than Holcim. It trades about 0.07 of its potential returns per unit of risk. Holcim is currently generating about 0.1 per unit of risk. If you would invest 18.00 in PPC Ltd ADR on August 31, 2024 and sell it today you would earn a total of 15.00 from holding PPC Ltd ADR or generate 83.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.39% |
| Values | Daily Returns |
PPC Ltd ADR vs. Holcim
Performance |
| Timeline |
| PPC Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Holcim |
PPC and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPC and Holcim
The main advantage of trading using opposite PPC and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPC 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.| PPC vs. Wienerberger Baustoffindustrie | PPC vs. China National Building | PPC vs. Anhui Conch Cement | PPC vs. Lafargeholcim Ltd ADR |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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