Correlation Between Wienerberger Baustoffindustri and CRH PLC

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

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

Diversification Opportunities for Wienerberger Baustoffindustri and CRH PLC

-0.63

Correlation Coefficient

Wienerberger Baustoffindustri  CRH PLC

Excellent diversification

The 3 months correlation between Wienerberger and CRH is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wienerberger Baustoffindustrie and CRH PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH PLC ADR and Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustrie are associated (or correlated) with CRH PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRH PLC ADR has no effect on the direction of Wienerberger Baustoffindustri i.e., Wienerberger Baustoffindustri and CRH PLC go up and down completely randomly.

Pair Corralation between Wienerberger Baustoffindustri and CRH PLC

Assuming the 90 days horizon Wienerberger Baustoffindustri is expected to generate 1.98 times less return on investment than CRH PLC. In addition to that, Wienerberger Baustoffindustri is 1.88 times more volatile than CRH PLC ADR. It trades about 0.03 of its total potential returns per unit of risk. CRH PLC ADR is currently generating about 0.12 per unit of volatility. If you would invest  3,742  in CRH PLC ADR on September 12, 2024 and sell it today you would earn a total of  6,161  from holding CRH PLC ADR or generate 164.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Wienerberger Baustoffindustrie  vs.  CRH PLC ADR

Wienerberger Baustoffindustri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wienerberger Baustoffindustrie has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Wienerberger Baustoffindustri is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CRH PLC ADR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRH PLC ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, CRH PLC demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wienerberger Baustoffindustri and CRH PLC

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

The idea behind Wienerberger Baustoffindustrie and CRH PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.