Correlation Between Vulcan Materials and ReTo Eco

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

By analyzing existing cross correlation between Vulcan Materials and ReTo Eco Solutions, you can compare the effects of market volatilities on Vulcan Materials and ReTo Eco 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 ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and ReTo Eco.

Diversification Opportunities for Vulcan Materials and ReTo Eco

-0.05

Correlation Coefficient

Vulcan Materials  ReTo Eco

Good diversification

The 3 months correlation between Vulcan and ReTo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and ReTo Eco go up and down completely randomly.

Pair Corralation between Vulcan Materials and ReTo Eco

Considering the 90-day investment horizon Vulcan Materials is expected to generate 21.58 times less return on investment than ReTo Eco. But when comparing it to its historical volatility, Vulcan Materials is 7.27 times less risky than ReTo Eco. It trades about 0.01 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  390.00  in ReTo Eco Solutions on February 9, 2025 and sell it today you would lose (68.00) from holding ReTo Eco Solutions or give up 17.44% of portfolio value over 90 days.

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

Vulcan Materials  vs.  ReTo Eco Solutions

Vulcan Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 1 (%) 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.

ReTo Eco Solutions

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ReTo Eco Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ReTo Eco displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vulcan Materials and ReTo Eco

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

The idea behind Vulcan Materials and ReTo Eco Solutions 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.