Correlation Between Loma Negra and Holcim Argentina

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

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

Diversification Opportunities for Loma Negra and Holcim Argentina

0.56

Correlation Coefficient

Loma Negra  Holcim Argentina

Very weak diversification

The 3 months correlation between Loma and Holcim is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania and Holcim Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim Argentina and Loma Negra 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 Loma Negra Compania are associated (or correlated) with Holcim Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim Argentina has no effect on the direction of Loma Negra i.e., Loma Negra and Holcim Argentina go up and down completely randomly.

Pair Corralation between Loma Negra and Holcim Argentina

Assuming the 90 days trading horizon Loma Negra Compania is expected to generate 1.18 times more return on investment than Holcim Argentina. However, Loma Negra is 1.18 times more volatile than Holcim Argentina SA. It trades about 0.01 of its potential returns per unit of risk. Holcim Argentina SA is currently generating about -0.07 per unit of risk. If you would invest  288,000  in Loma Negra Compania on December 30, 2024 and sell it today you would lose (3,500) from holding Loma Negra Compania or give up 1.22% of portfolio value over 90 days.

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

Loma Negra Compania  vs.  Holcim Argentina SA

Loma Negra Compania

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Loma Negra Compania are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Loma Negra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Holcim Argentina

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holcim Argentina SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Loma Negra and Holcim Argentina

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

The idea behind Loma Negra Compania and Holcim Argentina SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.