Correlation Between HEIA and Bayer AG
Can any of the company-specific risk be diversified away by investing in both HEIA and Bayer AG 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 HEIA and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEIA and Bayer AG NA, you can compare the effects of market volatilities on HEIA and Bayer AG 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 HEIA with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEIA and Bayer AG.
Diversification Opportunities for HEIA and Bayer AG
Pay attention - limited upside
The 3 months correlation between HEIA and Bayer is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding HEIA and Bayer AG NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG NA and HEIA 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 HEIA are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG NA has no effect on the direction of HEIA i.e., HEIA and Bayer AG go up and down completely randomly.
Pair Corralation between HEIA and Bayer AG
Given the investment horizon of 90 days HEIA is expected to generate 0.54 times more return on investment than Bayer AG. However, HEIA is 1.86 times less risky than Bayer AG. It trades about 0.17 of its potential returns per unit of risk. Bayer AG NA is currently generating about -0.1 per unit of risk. If you would invest 17,055 in HEIA on August 25, 2024 and sell it today you would earn a total of 3,067 from holding HEIA or generate 17.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 62.5% |
| Values | Daily Returns |
HEIA vs. Bayer AG NA
Performance |
| Timeline |
| HEIA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Bayer AG NA |
HEIA and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEIA and Bayer AG
The main advantage of trading using opposite HEIA and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEIA position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| HEIA vs. PT Bank Maybank | HEIA vs. National Bank Holdings | HEIA vs. OAKTRSPECLENDNEW | HEIA vs. The Hanover Insurance |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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