Correlation Between Persimmon Plc and Anhui Conch

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

By analyzing existing cross correlation between Persimmon Plc and Anhui Conch Cement, you can compare the effects of market volatilities on Persimmon Plc and Anhui Conch 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 Persimmon Plc with a short position of Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Persimmon Plc and Anhui Conch.

Diversification Opportunities for Persimmon Plc and Anhui Conch

0.71

Correlation Coefficient

Persimmon Plc  Anhui Conch

Poor diversification

The 3 months correlation between Persimmon and Anhui is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Persimmon Plc and Anhui Conch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Conch Cement and Persimmon Plc 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 Persimmon Plc are associated (or correlated) with Anhui Conch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Conch Cement has no effect on the direction of Persimmon Plc i.e., Persimmon Plc and Anhui Conch go up and down completely randomly.

Pair Corralation between Persimmon Plc and Anhui Conch

Assuming the 90 days horizon Persimmon Plc is expected to under-perform the Anhui Conch. But the pink sheet apears to be less risky and, when comparing its historical volatility, Persimmon Plc is 1.73 times less risky than Anhui Conch. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Anhui Conch Cement is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,329  in Anhui Conch Cement on October 2, 2024 and sell it today you would lose (60.00) from holding Anhui Conch Cement or give up 4.51% of portfolio value over 90 days.

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

Persimmon Plc  vs.  Anhui Conch Cement

Persimmon Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Persimmon Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Anhui Conch Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Conch Cement has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Persimmon Plc and Anhui Conch

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

The idea behind Persimmon Plc and Anhui Conch Cement 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.