Correlation Between HeidelbergCement and Holcim
Can any of the company-specific risk be diversified away by investing in both HeidelbergCement and Holcim 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 HeidelbergCement and Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeidelbergCement AG ADR and Holcim, you can compare the effects of market volatilities on HeidelbergCement and Holcim 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 HeidelbergCement with a short position of Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeidelbergCement and Holcim.
Diversification Opportunities for HeidelbergCement and Holcim
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HeidelbergCement and Holcim is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HeidelbergCement AG ADR and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim and HeidelbergCement 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 HeidelbergCement AG ADR are associated (or correlated) with Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of HeidelbergCement i.e., HeidelbergCement and Holcim go up and down completely randomly.
Pair Corralation between HeidelbergCement and Holcim
Assuming the 90 days horizon HeidelbergCement is expected to generate 1.07 times less return on investment than Holcim. But when comparing it to its historical volatility, HeidelbergCement AG ADR is 1.56 times less risky than Holcim. It trades about 0.12 of its potential returns per unit of risk. Holcim is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,751 in Holcim on August 30, 2024 and sell it today you would earn a total of 5,409 from holding Holcim or generate 113.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.27% |
| Values | Daily Returns |
HeidelbergCement AG ADR vs. Holcim
Performance |
| Timeline |
| HeidelbergCement AG ADR |
| Holcim |
HeidelbergCement and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HeidelbergCement and Holcim
The main advantage of trading using opposite HeidelbergCement and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeidelbergCement position performs unexpectedly, Holcim 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 Holcim will offset losses from the drop in Holcim's long position.| HeidelbergCement vs. Xinyi Glass Holdings | HeidelbergCement vs. CEMATRIX | HeidelbergCement vs. CEMEX SAB de | HeidelbergCement vs. China National Building |
| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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