Correlation Between Heidelberg Materials and LION ONE
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on Heidelberg Materials and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and LION ONE.
Diversification Opportunities for Heidelberg Materials and LION ONE
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Heidelberg and LION is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and LION ONE go up and down completely randomly.
Pair Corralation between Heidelberg Materials and LION ONE
Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 0.22 times more return on investment than LION ONE. However, Heidelberg Materials AG is 4.57 times less risky than LION ONE. It trades about 0.27 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.15 per unit of risk. If you would invest 11,700 in Heidelberg Materials AG on September 13, 2024 and sell it today you would earn a total of 660.00 from holding Heidelberg Materials AG or generate 5.64% 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. LION ONE METALS
Performance |
| Timeline |
| Heidelberg Materials |
| LION ONE METALS |
Heidelberg Materials and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and LION ONE
The main advantage of trading using opposite Heidelberg Materials and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Heidelberg Materials vs. Superior Plus Corp | Heidelberg Materials vs. NMI Holdings | Heidelberg Materials vs. SIVERS SEMICONDUCTORS AB | Heidelberg Materials vs. NorAm Drilling AS |
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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