Correlation Between Monarch Cement and Loma Negra
Can any of the company-specific risk be diversified away by investing in both Monarch Cement and Loma Negra 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 Loma Negra 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 Loma Negra Compania, you can compare the effects of market volatilities on Monarch Cement and Loma Negra 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 Loma Negra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monarch Cement and Loma Negra.
Diversification Opportunities for Monarch Cement and Loma Negra
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monarch and Loma is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Monarch Cement and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania 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 Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Monarch Cement i.e., Monarch Cement and Loma Negra go up and down completely randomly.
Pair Corralation between Monarch Cement and Loma Negra
Given the investment horizon of 90 days The Monarch Cement is expected to generate 0.31 times more return on investment than Loma Negra. However, The Monarch Cement is 3.26 times less risky than Loma Negra. It trades about 0.12 of its potential returns per unit of risk. Loma Negra Compania is currently generating about -0.06 per unit of risk. If you would invest 21,651 in The Monarch Cement on December 1, 2024 and sell it today you would earn a total of 1,647 from holding The Monarch Cement or generate 7.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Monarch Cement vs. Loma Negra Compania
Performance |
Timeline |
Monarch Cement |
Loma Negra Compania |
Monarch Cement and Loma Negra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Monarch Cement and Loma Negra
The main advantage of trading using opposite Monarch Cement and Loma Negra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monarch Cement position performs unexpectedly, Loma Negra 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 Loma Negra will offset losses from the drop in Loma Negra's long position.Monarch Cement vs. Eagle Materials | Monarch Cement vs. Cementos Pacasmayo SAA | Monarch Cement vs. Loma Negra Compania | Monarch Cement vs. United States Lime |
Loma Negra vs. James Hardie Industries | Loma Negra vs. United States Lime | Loma Negra vs. Eagle Materials | Loma Negra vs. Cementos Pacasmayo SAA |
Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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