Correlation Between Vulcan Materials and Cirmaker Technology

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

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

Diversification Opportunities for Vulcan Materials and Cirmaker Technology

-0.76

Correlation Coefficient

Vulcan Materials  Cirmaker Technology

Pay attention - limited upside

The 3 months correlation between Vulcan and Cirmaker is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology and Vulcan Materials 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 Vulcan Materials are associated (or correlated) with Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Vulcan Materials and Cirmaker Technology

Considering the 90-day investment horizon Vulcan Materials is expected to under-perform the Cirmaker Technology. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 4.14 times less risky than Cirmaker Technology. The stock trades about -0.5 of its potential returns per unit of risk. The Cirmaker Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Cirmaker Technology on October 10, 2024 and sell it today you would earn a total of  0.90  from holding Cirmaker Technology or generate 20.0% return on investment over 90 days.

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

Vulcan Materials  vs.  Cirmaker Technology

Vulcan Materials

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Vulcan Materials is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cirmaker Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirmaker Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Cirmaker Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vulcan Materials and Cirmaker Technology

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

The idea behind Vulcan Materials and Cirmaker Technology 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.