Correlation Between Heidelberger Druckmaschinen and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both Heidelberger Druckmaschinen and Next Hydrogen 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 Heidelberger Druckmaschinen and Next Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberger Druckmaschinen AG and Next Hydrogen Solutions, you can compare the effects of market volatilities on Heidelberger Druckmaschinen and Next Hydrogen 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 Heidelberger Druckmaschinen with a short position of Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberger Druckmaschinen and Next Hydrogen.
Diversification Opportunities for Heidelberger Druckmaschinen and Next Hydrogen
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heidelberger and Next is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberger Druckmaschinen AG and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and Heidelberger Druckmaschinen 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 Heidelberger Druckmaschinen AG are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Heidelberger Druckmaschinen i.e., Heidelberger Druckmaschinen and Next Hydrogen go up and down completely randomly.
Pair Corralation between Heidelberger Druckmaschinen and Next Hydrogen
Assuming the 90 days horizon Heidelberger Druckmaschinen AG is expected to under-perform the Next Hydrogen. But the pink sheet apears to be less risky and, when comparing its historical volatility, Heidelberger Druckmaschinen AG is 3.73 times less risky than Next Hydrogen. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Next Hydrogen Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 65.00 in Next Hydrogen Solutions on September 2, 2024 and sell it today you would lose (35.00) from holding Next Hydrogen Solutions or give up 53.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberger Druckmaschinen AG vs. Next Hydrogen Solutions
Performance |
| Timeline |
| Heidelberger Druckmaschinen |
| Next Hydrogen Solutions |
Heidelberger Druckmaschinen and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberger Druckmaschinen and Next Hydrogen
The main advantage of trading using opposite Heidelberger Druckmaschinen and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberger Druckmaschinen position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.The idea behind Heidelberger Druckmaschinen AG and Next Hydrogen 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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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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