Correlation Between HeidelbergCement and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both HeidelbergCement and BANK HANDLOWY 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 BANK HANDLOWY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeidelbergCement AG and BANK HANDLOWY, you can compare the effects of market volatilities on HeidelbergCement and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeidelbergCement and BANK HANDLOWY.
Diversification Opportunities for HeidelbergCement and BANK HANDLOWY
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HeidelbergCement and BANK is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding HeidelbergCement AG and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 are associated (or correlated) with BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of HeidelbergCement i.e., HeidelbergCement and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between HeidelbergCement and BANK HANDLOWY
Assuming the 90 days horizon HeidelbergCement is expected to generate 1.17 times less return on investment than BANK HANDLOWY. But when comparing it to its historical volatility, HeidelbergCement AG is 2.64 times less risky than BANK HANDLOWY. It trades about 0.14 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,255 in BANK HANDLOWY on August 24, 2024 and sell it today you would earn a total of 775.00 from holding BANK HANDLOWY or generate 61.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HeidelbergCement AG vs. BANK HANDLOWY
Performance |
| Timeline |
| HeidelbergCement |
| BANK HANDLOWY |
HeidelbergCement and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HeidelbergCement and BANK HANDLOWY
The main advantage of trading using opposite HeidelbergCement and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeidelbergCement position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| HeidelbergCement vs. Vulcan Materials | HeidelbergCement vs. Origin Agritech | HeidelbergCement vs. SIVERS SEMICONDUCTORS AB | HeidelbergCement vs. Talanx AG |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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