Correlation Between PARKEN Sport and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both PARKEN Sport 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 PARKEN Sport and Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PARKEN Sport Entertainment and Heidelberg Materials AG, you can compare the effects of market volatilities on PARKEN Sport 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 PARKEN Sport with a short position of Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and Heidelberg Materials.
Diversification Opportunities for PARKEN Sport and Heidelberg Materials
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PARKEN and Heidelberg is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and PARKEN Sport 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 PARKEN Sport Entertainment 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 PARKEN Sport i.e., PARKEN Sport and Heidelberg Materials go up and down completely randomly.
Pair Corralation between PARKEN Sport and Heidelberg Materials
Assuming the 90 days horizon PARKEN Sport is expected to generate 5.5 times less return on investment than Heidelberg Materials. In addition to that, PARKEN Sport is 1.18 times more volatile than Heidelberg Materials AG. It trades about 0.05 of its total potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.35 per unit of volatility. If you would invest 9,782 in Heidelberg Materials AG on September 13, 2024 and sell it today you would earn a total of 2,578 from holding Heidelberg Materials AG or generate 26.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PARKEN Sport Entertainment vs. Heidelberg Materials AG
Performance |
| Timeline |
| PARKEN Sport Enterta |
| Heidelberg Materials |
PARKEN Sport and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PARKEN Sport and Heidelberg Materials
The main advantage of trading using opposite PARKEN Sport and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PARKEN Sport 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.| PARKEN Sport vs. Science Applications International | PARKEN Sport vs. DATAGROUP SE | PARKEN Sport vs. Pure Storage | PARKEN Sport vs. Elmos Semiconductor SE |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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