Correlation Between CRH Plc and Lafargeholcim

Can any of the company-specific risk be diversified away by investing in both CRH Plc and Lafargeholcim 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 CRH Plc and Lafargeholcim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CRH Plc and Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on CRH Plc and Lafargeholcim 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 CRH Plc with a short position of Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRH Plc and Lafargeholcim.

Diversification Opportunities for CRH Plc and Lafargeholcim

0.0

Correlation Coefficient

CRH Plc  Lafargeholcim

Pay attention - limited upside

The 3 months correlation between CRH and Lafargeholcim is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CRH Plc and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR and CRH Plc 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 CRH Plc are associated (or correlated) with Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of CRH Plc i.e., CRH Plc and Lafargeholcim go up and down completely randomly.

Pair Corralation between CRH Plc and Lafargeholcim

If you would invest  1,881  in Lafargeholcim Ltd ADR on September 4, 2024 and sell it today you would earn a total of  169.00  from holding Lafargeholcim Ltd ADR or generate 8.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

CRH Plc  vs.  Lafargeholcim Ltd ADR

CRH Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRH Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, CRH Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Lafargeholcim ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lafargeholcim Ltd ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Lafargeholcim may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CRH Plc and Lafargeholcim

The main advantage of trading using opposite CRH Plc and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH Plc position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim's long position.

The idea behind CRH Plc and Lafargeholcim Ltd ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.