Correlation Between Loma Negra and CRH PLC

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

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

Diversification Opportunities for Loma Negra and CRH PLC

0.16

Correlation Coefficient

Loma Negra  CRH PLC

Average diversification

The 3 months correlation between Loma and CRH is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Loma Negra Compania 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 Loma Negra 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 Loma Negra Compania 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 Loma Negra i.e., Loma Negra and CRH PLC go up and down completely randomly.

Pair Corralation between Loma Negra and CRH PLC

Given the investment horizon of 90 days Loma Negra Compania is expected to under-perform the CRH PLC. In addition to that, Loma Negra is 1.39 times more volatile than CRH PLC ADR. It trades about -0.1 of its total potential returns per unit of risk. CRH PLC ADR is currently generating about -0.08 per unit of volatility. If you would invest  9,324  in CRH PLC ADR on January 6, 2025 and sell it today you would lose (1,237) from holding CRH PLC ADR or give up 13.27% of portfolio value over 90 days.

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

Loma Negra Compania  vs.  CRH PLC ADR

Loma Negra Compania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loma Negra Compania 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 primary indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CRH PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRH PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Loma Negra and CRH PLC

The main advantage of trading using opposite Loma Negra and CRH PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loma Negra 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 Loma Negra Compania 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.