Correlation Between Citic Telecom and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Citic Telecom 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 Citic Telecom and Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citic Telecom International and Heidelberg Materials AG, you can compare the effects of market volatilities on Citic Telecom 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 Citic Telecom with a short position of Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citic Telecom and Heidelberg Materials.
Diversification Opportunities for Citic Telecom and Heidelberg Materials
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citic and Heidelberg is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Citic Telecom International and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and Citic Telecom 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 Citic Telecom International 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 Citic Telecom i.e., Citic Telecom and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Citic Telecom and Heidelberg Materials
Assuming the 90 days trading horizon Citic Telecom is expected to generate 1.43 times less return on investment than Heidelberg Materials. In addition to that, Citic Telecom is 1.7 times more volatile than Heidelberg Materials AG. It trades about 0.1 of its total potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.25 per unit of volatility. If you would invest 11,875 in Heidelberg Materials AG on September 15, 2024 and sell it today you would earn a total of 705.00 from holding Heidelberg Materials AG or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citic Telecom International vs. Heidelberg Materials AG
Performance |
| Timeline |
| Citic Telecom Intern |
| Heidelberg Materials |
Citic Telecom and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citic Telecom and Heidelberg Materials
The main advantage of trading using opposite Citic Telecom and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citic Telecom 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.| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
| Heidelberg Materials vs. CHEMICAL INDUSTRIES | Heidelberg Materials vs. INDO RAMA SYNTHETIC | Heidelberg Materials vs. Casio Computer CoLtd | Heidelberg Materials vs. FANDIFI TECHNOLOGY P |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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