Correlation Between Apple and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Heidelberg Materials AG, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Heidelberg Materials.
Diversification Opportunities for Apple and Heidelberg Materials
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apple and Heidelberg is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and Apple 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 Apple Inc 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 Apple i.e., Apple and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Apple and Heidelberg Materials
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.61 times more return on investment than Heidelberg Materials. However, Apple Inc is 1.63 times less risky than Heidelberg Materials. It trades about 0.59 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.16 per unit of risk. If you would invest 21,690 in Apple Inc on September 20, 2024 and sell it today you would earn a total of 2,495 from holding Apple Inc or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Heidelberg Materials AG
Performance |
| Timeline |
| Apple Inc |
| Heidelberg Materials |
Apple and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Heidelberg Materials
The main advantage of trading using opposite Apple and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Spirent Communications plc | Apple vs. Gamma Communications plc | Apple vs. SBA Communications Corp | Apple vs. Major Drilling Group |
| Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc | Heidelberg Materials vs. Apple Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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