Correlation Between Heidelberg Materials and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and CHINA HUARONG 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 HUARONG 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 HUARONG ENERHD 50, you can compare the effects of market volatilities on Heidelberg Materials and CHINA HUARONG 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 HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and CHINA HUARONG.
Diversification Opportunities for Heidelberg Materials and CHINA HUARONG
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Heidelberg and CHINA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD 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 HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Heidelberg Materials and CHINA HUARONG
Assuming the 90 days horizon Heidelberg Materials is expected to generate 8.98 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, Heidelberg Materials AG is 19.46 times less risky than CHINA HUARONG. It trades about 0.24 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.10 in CHINA HUARONG ENERHD 50 on November 2, 2024 and sell it today you would earn a total of 0.00 from holding CHINA HUARONG ENERHD 50 or generate 0.0% 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. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Heidelberg Materials |
| CHINA HUARONG ENERHD |
Heidelberg Materials and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and CHINA HUARONG
The main advantage of trading using opposite Heidelberg Materials and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.| Heidelberg Materials vs. STORE ELECTRONIC | Heidelberg Materials vs. SIEM OFFSHORE NEW | Heidelberg Materials vs. Arrow Electronics | Heidelberg Materials vs. Perdoceo Education |
| CHINA HUARONG vs. USWE SPORTS AB | CHINA HUARONG vs. Playtech plc | CHINA HUARONG vs. SILVER BULLET DATA | CHINA HUARONG vs. Information Services International Dentsu |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance |