Correlation Between Heidelberg Materials and Qingling Motors
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and Qingling Motors 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 Qingling Motors 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 Qingling Motors Co, you can compare the effects of market volatilities on Heidelberg Materials and Qingling Motors 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 Qingling Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and Qingling Motors.
Diversification Opportunities for Heidelberg Materials and Qingling Motors
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Heidelberg and Qingling is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Qingling Motors Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingling Motors 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 Qingling Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingling Motors has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Qingling Motors go up and down completely randomly.
Pair Corralation between Heidelberg Materials and Qingling Motors
Assuming the 90 days horizon Heidelberg Materials is expected to generate 2.28 times less return on investment than Qingling Motors. But when comparing it to its historical volatility, Heidelberg Materials AG is 2.35 times less risky than Qingling Motors. It trades about 0.25 of its potential returns per unit of risk. Qingling Motors Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5.60 in Qingling Motors Co on September 15, 2024 and sell it today you would earn a total of 0.76 from holding Qingling Motors Co or generate 13.57% 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. Qingling Motors Co
Performance |
| Timeline |
| Heidelberg Materials |
| Qingling Motors |
Heidelberg Materials and Qingling Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and Qingling Motors
The main advantage of trading using opposite Heidelberg Materials and Qingling Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, Qingling Motors 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 Qingling Motors will offset losses from the drop in Qingling Motors' long position.| Heidelberg Materials vs. CHEMICAL INDUSTRIES | Heidelberg Materials vs. INDO RAMA SYNTHETIC | Heidelberg Materials vs. Casio Computer CoLtd | Heidelberg Materials vs. FANDIFI TECHNOLOGY P |
| Qingling Motors vs. Heidelberg Materials AG | Qingling Motors vs. Host Hotels Resorts | Qingling Motors vs. Compagnie Plastic Omnium | Qingling Motors vs. INTERCONT HOTELS |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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