Correlation Between Monarch Cement and James Hardie

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

By analyzing existing cross correlation between The Monarch Cement and James Hardie Industries, you can compare the effects of market volatilities on Monarch Cement and James Hardie 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 Monarch Cement with a short position of James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monarch Cement and James Hardie.

Diversification Opportunities for Monarch Cement and James Hardie

0.13

Correlation Coefficient

Monarch Cement  James Hardie

Average diversification

The 3 months correlation between Monarch and James is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Monarch Cement and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries and Monarch Cement 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 The Monarch Cement are associated (or correlated) with James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Monarch Cement i.e., Monarch Cement and James Hardie go up and down completely randomly.

Pair Corralation between Monarch Cement and James Hardie

Given the investment horizon of 90 days The Monarch Cement is expected to generate 0.38 times more return on investment than James Hardie. However, The Monarch Cement is 2.64 times less risky than James Hardie. It trades about 0.04 of its potential returns per unit of risk. James Hardie Industries is currently generating about -0.11 per unit of risk. If you would invest  21,731  in The Monarch Cement on December 28, 2024 and sell it today you would earn a total of  469.00  from holding The Monarch Cement or generate 2.16% return on investment over 90 days.

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

The Monarch Cement  vs.  James Hardie Industries

Monarch Cement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Monarch Cement are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Monarch Cement is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

James Hardie Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days James Hardie Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain fairly 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 Monarch Cement and James Hardie

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

The idea behind The Monarch Cement and James Hardie Industries 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.