Correlation Between Holcim and Wienerberger Baustoffindustri

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

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

Diversification Opportunities for Holcim and Wienerberger Baustoffindustri

0.83

Correlation Coefficient

Holcim  Wienerberger Baustoffindustri

Very poor diversification

The 3 months correlation between Holcim and Wienerberger is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Holcim and Wienerberger Baustoffindustrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger Baustoffindustri and Holcim 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 Holcim 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 Holcim i.e., Holcim and Wienerberger Baustoffindustri go up and down completely randomly.

Pair Corralation between Holcim and Wienerberger Baustoffindustri

Assuming the 90 days horizon Holcim is expected to generate 1.86 times less return on investment than Wienerberger Baustoffindustri. But when comparing it to its historical volatility, Holcim is 2.14 times less risky than Wienerberger Baustoffindustri. It trades about 0.12 of its potential returns per unit of risk. Wienerberger Baustoffindustrie is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  556.00  in Wienerberger Baustoffindustrie on December 29, 2024 and sell it today you would earn a total of  134.00  from holding Wienerberger Baustoffindustrie or generate 24.1% return on investment over 90 days.

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

Holcim  vs.  Wienerberger Baustoffindustrie

Holcim

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holcim are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Holcim 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 Holcim and Wienerberger Baustoffindustri

The main advantage of trading using opposite Holcim and Wienerberger Baustoffindustri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holcim 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 Holcim 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 CEOs Directory module to screen CEOs from public companies around the world.