Correlation Between CEMATRIX and CRH PLC

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

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

Diversification Opportunities for CEMATRIX and CRH PLC

-0.48

Correlation Coefficient

CEMATRIX  CRH PLC

Very good diversification

The 3 months correlation between CEMATRIX and CRH is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CEMATRIX and CRH PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH PLC ADR and CEMATRIX 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 CEMATRIX are associated (or correlated) with CRH PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRH PLC ADR has no effect on the direction of CEMATRIX i.e., CEMATRIX and CRH PLC go up and down completely randomly.

Pair Corralation between CEMATRIX and CRH PLC

Assuming the 90 days horizon CEMATRIX is expected to generate 2.31 times more return on investment than CRH PLC. However, CEMATRIX is 2.31 times more volatile than CRH PLC ADR. It trades about 0.16 of its potential returns per unit of risk. CRH PLC ADR is currently generating about -0.21 per unit of risk. If you would invest  25.00  in CEMATRIX on February 3, 2024 and sell it today you would earn a total of  3.00  from holding CEMATRIX or generate 12.0% return on investment over 90 days.

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

CEMATRIX  vs.  CRH PLC ADR

CEMATRIX

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CEMATRIX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CEMATRIX reported solid returns over the last few months and may actually be approaching a breakup point.

CRH PLC ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CRH PLC ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, CRH PLC may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with CEMATRIX and CRH PLC

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

The idea behind CEMATRIX and CRH PLC ADR 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.