Correlation Between Heidelberg Materials and China Communications
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and China Communications 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 China Communications 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 China Communications Services, you can compare the effects of market volatilities on Heidelberg Materials and China Communications 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 China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and China Communications.
Diversification Opportunities for Heidelberg Materials and China Communications
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Heidelberg and China is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and China Communications go up and down completely randomly.
Pair Corralation between Heidelberg Materials and China Communications
Assuming the 90 days horizon Heidelberg Materials is expected to generate 1.99 times less return on investment than China Communications. But when comparing it to its historical volatility, Heidelberg Materials AG is 4.24 times less risky than China Communications. It trades about 0.16 of its potential returns per unit of risk. China Communications Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21.00 in China Communications Services on September 14, 2024 and sell it today you would earn a total of 30.00 from holding China Communications Services or generate 142.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. China Communications Services
Performance |
| Timeline |
| Heidelberg Materials |
| China Communications |
Heidelberg Materials and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and China Communications
The main advantage of trading using opposite Heidelberg Materials and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| Heidelberg Materials vs. Solstad Offshore ASA | Heidelberg Materials vs. MCEWEN MINING INC | Heidelberg Materials vs. DISTRICT METALS | Heidelberg Materials vs. ADRIATIC METALS LS 013355 |
| China Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |