Correlation Between Heidelberg Materials and REGAL ASIAN
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and REGAL ASIAN 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 REGAL ASIAN 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 REGAL ASIAN INVESTMENTS, you can compare the effects of market volatilities on Heidelberg Materials and REGAL ASIAN 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 REGAL ASIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and REGAL ASIAN.
Diversification Opportunities for Heidelberg Materials and REGAL ASIAN
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heidelberg and REGAL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS 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 REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and REGAL ASIAN go up and down completely randomly.
Pair Corralation between Heidelberg Materials and REGAL ASIAN
Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 0.95 times more return on investment than REGAL ASIAN. However, Heidelberg Materials AG is 1.05 times less risky than REGAL ASIAN. It trades about 0.12 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about 0.0 per unit of risk. If you would invest 5,219 in Heidelberg Materials AG on September 24, 2024 and sell it today you would earn a total of 6,701 from holding Heidelberg Materials AG or generate 128.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. REGAL ASIAN INVESTMENTS
Performance |
| Timeline |
| Heidelberg Materials |
| REGAL ASIAN INVESTMENTS |
Heidelberg Materials and REGAL ASIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and REGAL ASIAN
The main advantage of trading using opposite Heidelberg Materials and REGAL ASIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, REGAL ASIAN 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 REGAL ASIAN will offset losses from the drop in REGAL ASIAN's long position.| Heidelberg Materials vs. Daikin IndustriesLtd | Heidelberg Materials vs. Vulcan Materials | Heidelberg Materials vs. Anhui Conch Cement | Heidelberg Materials vs. Martin Marietta Materials |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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