Correlation Between Anhui Conch and Wienerberger Baustoffindustri

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

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

Diversification Opportunities for Anhui Conch and Wienerberger Baustoffindustri

0.64

Correlation Coefficient

Anhui Conch  Wienerberger Baustoffindustri

Poor diversification

The 3 months correlation between Anhui and Wienerberger is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Conch Cement and Wienerberger Baustoffindustrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger Baustoffindustri and Anhui Conch 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 Anhui Conch Cement are associated (or correlated) with Wienerberger Baustoffindustri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger Baustoffindustri has no effect on the direction of Anhui Conch i.e., Anhui Conch and Wienerberger Baustoffindustri go up and down completely randomly.

Pair Corralation between Anhui Conch and Wienerberger Baustoffindustri

Assuming the 90 days horizon Anhui Conch is expected to generate 1.21 times less return on investment than Wienerberger Baustoffindustri. But when comparing it to its historical volatility, Anhui Conch Cement is 1.47 times less risky than Wienerberger Baustoffindustri. It trades about 0.13 of its potential returns per unit of risk. Wienerberger Baustoffindustrie is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  556.00  in Wienerberger Baustoffindustrie on December 30, 2024 and sell it today you would earn a total of  144.00  from holding Wienerberger Baustoffindustrie or generate 25.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.71%
Values	Daily Returns

Anhui Conch Cement  vs.  Wienerberger Baustoffindustrie

Anhui Conch Cement

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Conch Cement are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Anhui Conch reported solid returns over the last few months and may actually be approaching a breakup point.

Wienerberger Baustoffindustri

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wienerberger Baustoffindustrie are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Wienerberger Baustoffindustri showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anhui Conch and Wienerberger Baustoffindustri

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

The idea behind Anhui Conch Cement and Wienerberger Baustoffindustrie 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.