Correlation Between Summit Materials and Anhui Conch
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Anhui Conch 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 Summit Materials and Anhui Conch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Anhui Conch Cement, you can compare the effects of market volatilities on Summit Materials and Anhui Conch 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 Summit Materials with a short position of Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Anhui Conch.
Diversification Opportunities for Summit Materials and Anhui Conch
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and Anhui is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Anhui Conch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Conch Cement and Summit Materials 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 Summit Materials are associated (or correlated) with Anhui Conch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Conch Cement has no effect on the direction of Summit Materials i.e., Summit Materials and Anhui Conch go up and down completely randomly.
Pair Corralation between Summit Materials and Anhui Conch
Considering the 90-day investment horizon Summit Materials is expected to generate 0.65 times more return on investment than Anhui Conch. However, Summit Materials is 1.54 times less risky than Anhui Conch. It trades about 0.2 of its potential returns per unit of risk. Anhui Conch Cement is currently generating about -0.05 per unit of risk. If you would invest 4,642 in Summit Materials on August 31, 2024 and sell it today you would earn a total of 467.00 from holding Summit Materials or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Anhui Conch Cement
Performance |
| Timeline |
| Summit Materials |
| Anhui Conch Cement |
Summit Materials and Anhui Conch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Anhui Conch
The main advantage of trading using opposite Summit Materials and Anhui Conch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Anhui Conch 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 Anhui Conch will offset losses from the drop in Anhui Conch's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Anhui Conch vs. Xinyi Glass Holdings | Anhui Conch vs. PT Berkah Beton | Anhui Conch vs. Taiga Building Products | Anhui Conch vs. Xinyi Glass Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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