Correlation Between CRH PLC and CRH Plc

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

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

Diversification Opportunities for CRH PLC and CRH Plc

0.81

Correlation Coefficient

CRH PLC  CRH Plc

Very poor diversification

The 3 months correlation between CRH and CRH is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR and CRH Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH Plc 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 ADR 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 has no effect on the direction of CRH PLC i.e., CRH PLC and CRH Plc go up and down completely randomly.

Pair Corralation between CRH PLC and CRH Plc

Considering the 90-day investment horizon CRH PLC is expected to generate 1.4 times less return on investment than CRH Plc. In addition to that, CRH PLC is 1.11 times more volatile than CRH Plc. It trades about 0.12 of its total potential returns per unit of risk. CRH Plc is currently generating about 0.19 per unit of volatility. If you would invest  3,945  in CRH Plc on September 14, 2024 and sell it today you would earn a total of  1,907  from holding CRH Plc or generate 48.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	28.89%
Values	Daily Returns

CRH PLC ADR  vs.  CRH Plc

CRH PLC ADR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRH PLC ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, CRH PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with CRH PLC and CRH Plc

The main advantage of trading using opposite CRH PLC and CRH Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH PLC 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 CRH PLC ADR and CRH Plc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.