Correlation Between Vulcan Materials and Anhui Conch

Can any of the company-specific risk be diversified away by investing in both Vulcan 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 Vulcan 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 Vulcan Materials and Anhui Conch Cement, you can compare the effects of market volatilities on Vulcan 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 Vulcan Materials with a short position of Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Anhui Conch.

Diversification Opportunities for Vulcan Materials and Anhui Conch

0.13

Correlation Coefficient

Vulcan Materials  Anhui Conch

Average diversification

The 3 months correlation between Vulcan and Anhui is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan 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 Vulcan 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 Vulcan 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 Vulcan Materials i.e., Vulcan Materials and Anhui Conch go up and down completely randomly.

Pair Corralation between Vulcan Materials and Anhui Conch

Assuming the 90 days horizon Vulcan Materials is expected to under-perform the Anhui Conch. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 2.27 times less risky than Anhui Conch. The stock trades about -0.31 of its potential returns per unit of risk. The Anhui Conch Cement is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  249.00  in Anhui Conch Cement on September 23, 2024 and sell it today you would lose (10.00) from holding Anhui Conch Cement or give up 4.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vulcan Materials  vs.  Anhui Conch Cement

Vulcan Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anhui Conch Cement

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Conch Cement are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Anhui Conch reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vulcan Materials and Anhui Conch

The main advantage of trading using opposite Vulcan Materials and Anhui Conch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan 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.

The idea behind Vulcan Materials and Anhui Conch Cement 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.