Correlation Between Lafargeholcim and Wienerberger Baustoffindustri

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

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

Diversification Opportunities for Lafargeholcim and Wienerberger Baustoffindustri

-0.4

Correlation Coefficient

Lafargeholcim  Wienerberger Baustoffindustri

Very good diversification

The 3 months correlation between Lafargeholcim and Wienerberger is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR and Wienerberger Baustoffindustrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger Baustoffindustri and Lafargeholcim 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 Lafargeholcim Ltd ADR 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 Lafargeholcim i.e., Lafargeholcim and Wienerberger Baustoffindustri go up and down completely randomly.

Pair Corralation between Lafargeholcim and Wienerberger Baustoffindustri

Assuming the 90 days horizon Lafargeholcim Ltd ADR is expected to generate 0.38 times more return on investment than Wienerberger Baustoffindustri. However, Lafargeholcim Ltd ADR is 2.61 times less risky than Wienerberger Baustoffindustri. It trades about 0.14 of its potential returns per unit of risk. Wienerberger Baustoffindustrie is currently generating about -0.05 per unit of risk. If you would invest  1,877  in Lafargeholcim Ltd ADR on September 5, 2024 and sell it today you would earn a total of  197.00  from holding Lafargeholcim Ltd ADR or generate 10.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lafargeholcim Ltd ADR  vs.  Wienerberger Baustoffindustrie

Lafargeholcim ADR

Risk-Adjusted Performance

11 of 100

Good

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

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 latest unsteady performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lafargeholcim and Wienerberger Baustoffindustri

The main advantage of trading using opposite Lafargeholcim and Wienerberger Baustoffindustri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim 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 Lafargeholcim Ltd ADR 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.