Correlation Between Heidelberg Materials and Hua Hong
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and Hua Hong 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 Hua Hong 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 Hua Hong Semiconductor, you can compare the effects of market volatilities on Heidelberg Materials and Hua Hong 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 Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and Hua Hong.
Diversification Opportunities for Heidelberg Materials and Hua Hong
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Heidelberg and Hua is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor 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 Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Hua Hong go up and down completely randomly.
Pair Corralation between Heidelberg Materials and Hua Hong
Assuming the 90 days horizon Heidelberg Materials is expected to generate 1.08 times less return on investment than Hua Hong. But when comparing it to its historical volatility, Heidelberg Materials AG is 1.7 times less risky than Hua Hong. It trades about 0.33 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Hua Hong Semiconductor on November 7, 2024 and sell it today you would earn a total of 32.00 from holding Hua Hong Semiconductor or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Heidelberg Materials AG vs. Hua Hong Semiconductor
Performance |
| Timeline |
| Heidelberg Materials |
| Hua Hong Semiconductor |
Heidelberg Materials and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and Hua Hong
The main advantage of trading using opposite Heidelberg Materials and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| Heidelberg Materials vs. COSMOSTEEL HLDGS | Heidelberg Materials vs. ITALIAN WINE BRANDS | Heidelberg Materials vs. Sekisui Chemical Co | Heidelberg Materials vs. VIVA WINE GROUP |
| Hua Hong vs. CRISPR Therapeutics AG | Hua Hong vs. MAVEN WIRELESS SWEDEN | Hua Hong vs. The Boston Beer | Hua Hong vs. Infrastrutture Wireless Italiane |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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