Correlation Between United States and Holcim Argentina
Can any of the company-specific risk be diversified away by investing in both United States and Holcim Argentina 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 United States and Holcim Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Holcim Argentina SA, you can compare the effects of market volatilities on United States and Holcim Argentina 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 United States with a short position of Holcim Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Holcim Argentina.
Diversification Opportunities for United States and Holcim Argentina
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Holcim is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Holcim Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim Argentina and United States 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 United States Steel are associated (or correlated) with Holcim Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim Argentina has no effect on the direction of United States i.e., United States and Holcim Argentina go up and down completely randomly.
Pair Corralation between United States and Holcim Argentina
Given the investment horizon of 90 days United States Steel is expected to generate 0.75 times more return on investment than Holcim Argentina. However, United States Steel is 1.33 times less risky than Holcim Argentina. It trades about 0.23 of its potential returns per unit of risk. Holcim Argentina SA is currently generating about -0.29 per unit of risk. If you would invest 1,442,500 in United States Steel on November 30, 2024 and sell it today you would earn a total of 187,500 from holding United States Steel or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Holcim Argentina SA
Performance |
| Timeline |
| United States Steel |
| Holcim Argentina |
United States and Holcim Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Holcim Argentina
The main advantage of trading using opposite United States and Holcim Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Holcim Argentina 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 Argentina will offset losses from the drop in Holcim Argentina's long position.| United States vs. Verizon Communications | ||
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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