Correlation Between Aluminumof China and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and Heidelberg Materials 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 Aluminumof China and Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Heidelberg Materials AG, you can compare the effects of market volatilities on Aluminumof China and Heidelberg Materials 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 Aluminumof China with a short position of Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Heidelberg Materials.
Diversification Opportunities for Aluminumof China and Heidelberg Materials
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aluminumof and Heidelberg is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and Aluminumof China 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 Aluminum of are associated (or correlated) with Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of Aluminumof China i.e., Aluminumof China and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Aluminumof China and Heidelberg Materials
Assuming the 90 days horizon Aluminum of is expected to generate 3.98 times more return on investment than Heidelberg Materials. However, Aluminumof China is 3.98 times more volatile than Heidelberg Materials AG. It trades about 0.13 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.27 per unit of risk. If you would invest 52.00 in Aluminum of on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Aluminum of or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Heidelberg Materials AG
Performance |
| Timeline |
| Aluminumof China |
| Heidelberg Materials |
Aluminumof China and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Heidelberg Materials
The main advantage of trading using opposite Aluminumof China and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China vs. SIVERS SEMICONDUCTORS AB |
| Heidelberg Materials vs. Superior Plus Corp | Heidelberg Materials vs. NMI Holdings | Heidelberg Materials vs. SIVERS SEMICONDUCTORS AB | Heidelberg Materials vs. NorAm Drilling AS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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