Correlation Between UltraTech Cement and Holcim

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

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

Diversification Opportunities for UltraTech Cement and Holcim

0.0

Correlation Coefficient

UltraTech Cement  Holcim

Pay attention - limited upside

The 3 months correlation between UltraTech and Holcim is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UltraTech Cement Limited and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim and UltraTech 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 UltraTech Cement Limited are associated (or correlated) with Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of UltraTech Cement i.e., UltraTech Cement and Holcim go up and down completely randomly.

Pair Corralation between UltraTech Cement and Holcim

If you would invest  9,840  in Holcim on September 14, 2024 and sell it today you would earn a total of  360.00  from holding Holcim or generate 3.66% return on investment over 90 days.

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

UltraTech Cement Limited  vs.  Holcim

UltraTech Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UltraTech Cement Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UltraTech Cement is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Holcim

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Holcim are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Holcim is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UltraTech Cement and Holcim

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

The idea behind UltraTech Cement Limited and Holcim 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.