Correlation Between Loma Negra and United States

Can any of the company-specific risk be diversified away by investing in both Loma Negra and United States 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 United States 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 United States Lime, you can compare the effects of market volatilities on Loma Negra and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loma Negra and United States.

Diversification Opportunities for Loma Negra and United States

0.61

Correlation Coefficient

Loma Negra  United States

Poor diversification

The 3 months correlation between Loma and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania and United States Lime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Lime 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Lime has no effect on the direction of Loma Negra i.e., Loma Negra and United States go up and down completely randomly.

Pair Corralation between Loma Negra and United States

Given the investment horizon of 90 days Loma Negra Compania is expected to generate 1.35 times more return on investment than United States. However, Loma Negra is 1.35 times more volatile than United States Lime. It trades about -0.02 of its potential returns per unit of risk. United States Lime is currently generating about -0.25 per unit of risk. If you would invest  1,206  in Loma Negra Compania on December 28, 2024 and sell it today you would lose (91.00) from holding Loma Negra Compania or give up 7.55% of portfolio value over 90 days.

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

Loma Negra Compania  vs.  United States Lime

Loma Negra Compania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loma Negra Compania has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Loma Negra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

United States Lime

Risk-Adjusted Performance

Very Weak

Over the last 90 days United States Lime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Loma Negra and United States

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

The idea behind Loma Negra Compania and United States Lime 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.