Correlation Between Lafargeholcim and Holcim

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

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

Diversification Opportunities for Lafargeholcim and Holcim

-0.81

Correlation Coefficient

Lafargeholcim  Holcim

Pay attention - limited upside

The 3 months correlation between Lafargeholcim and Holcim is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lafargeholcim Ltd ADR and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim and Lafargeholcim 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 Lafargeholcim Ltd ADR 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 Lafargeholcim i.e., Lafargeholcim and Holcim go up and down completely randomly.

Pair Corralation between Lafargeholcim and Holcim

Assuming the 90 days horizon Lafargeholcim Ltd ADR is expected to generate 0.26 times more return on investment than Holcim. However, Lafargeholcim Ltd ADR is 3.89 times less risky than Holcim. It trades about 0.2 of its potential returns per unit of risk. Holcim is currently generating about -0.04 per unit of risk. If you would invest  1,329  in Lafargeholcim Ltd ADR on May 7, 2025 and sell it today you would earn a total of  273.00  from holding Lafargeholcim Ltd ADR or generate 20.54% return on investment over 90 days.

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

Lafargeholcim Ltd ADR  vs.  Holcim

Lafargeholcim ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lafargeholcim Ltd ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Lafargeholcim showed solid returns over the last few months and may actually be approaching a breakup point.

Holcim

Risk-Adjusted Performance

Weakest

Over the last 90 days Holcim has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lafargeholcim and Holcim

The main advantage of trading using opposite Lafargeholcim and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lafargeholcim 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 Lafargeholcim Ltd ADR 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.