Correlation Between Heidelberg Materials and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and Haier Smart 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 Haier Smart 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 Haier Smart Home, you can compare the effects of market volatilities on Heidelberg Materials and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and Haier Smart.
Diversification Opportunities for Heidelberg Materials and Haier Smart
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heidelberg and Haier is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Haier Smart go up and down completely randomly.
Pair Corralation between Heidelberg Materials and Haier Smart
Assuming the 90 days trading horizon Heidelberg Materials is expected to generate 1.24 times less return on investment than Haier Smart. But when comparing it to its historical volatility, Heidelberg Materials AG is 1.25 times less risky than Haier Smart. It trades about 0.12 of its potential returns per unit of risk. Haier Smart Home is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 103.00 in Haier Smart Home on October 16, 2024 and sell it today you would earn a total of 75.00 from holding Haier Smart Home or generate 72.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heidelberg Materials AG vs. Haier Smart Home
Performance |
| Timeline |
| Heidelberg Materials |
| Haier Smart Home |
Heidelberg Materials and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heidelberg Materials and Haier Smart
The main advantage of trading using opposite Heidelberg Materials and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Heidelberg Materials vs. Corporate Office Properties | Heidelberg Materials vs. INVITATION HOMES DL | Heidelberg Materials vs. Haier Smart Home | Heidelberg Materials vs. ADRIATIC METALS LS 013355 |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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