Correlation Between Heidelberg Materials and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and Applied 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 Heidelberg Materials and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heidelberg Materials AG and Applied Materials, you can compare the effects of market volatilities on Heidelberg Materials and Applied 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 Heidelberg Materials with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and Applied Materials.
Diversification Opportunities for Heidelberg Materials and Applied Materials
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Heidelberg and Applied is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Heidelberg Materials 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 Heidelberg Materials AG are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Applied Materials go up and down completely randomly.
Pair Corralation between Heidelberg Materials and Applied Materials
Assuming the 90 days trading horizon Heidelberg Materials is expected to generate 1.19 times less return on investment than Applied Materials. But when comparing it to its historical volatility, Heidelberg Materials AG is 1.82 times less risky than Applied Materials. It trades about 0.15 of its potential returns per unit of risk. Applied Materials is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 15,828 in Applied Materials on September 20, 2024 and sell it today you would earn a total of 772.00 from holding Applied Materials or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Heidelberg Materials AG vs. Applied Materials
Performance |
| Timeline |
| Heidelberg Materials |
| Applied Materials |
Heidelberg Materials and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and Applied Materials
The main advantage of trading using opposite Heidelberg Materials and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, Applied 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Heidelberg Materials vs. Applied Materials | Heidelberg Materials vs. Eidesvik Offshore ASA | Heidelberg Materials vs. THRACE PLASTICS | Heidelberg Materials vs. Haier Smart Home |
| Applied Materials vs. Tokyo Electron Limited | Applied Materials vs. Superior Plus Corp | Applied Materials vs. SIVERS SEMICONDUCTORS AB | Applied Materials vs. Norsk Hydro ASA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |