Correlation Between Sinopec Shanghai and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both Sinopec Shanghai and Heidelberg Materials 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 Sinopec Shanghai and Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sinopec Shanghai Petrochemical and Heidelberg Materials AG, you can compare the effects of market volatilities on Sinopec Shanghai and Heidelberg Materials 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 Sinopec Shanghai with a short position of Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopec Shanghai and Heidelberg Materials.
Diversification Opportunities for Sinopec Shanghai and Heidelberg Materials
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sinopec and Heidelberg is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sinopec Shanghai Petrochemical and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and Sinopec Shanghai 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 Sinopec Shanghai Petrochemical are associated (or correlated) with Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of Sinopec Shanghai i.e., Sinopec Shanghai and Heidelberg Materials go up and down completely randomly.
Pair Corralation between Sinopec Shanghai and Heidelberg Materials
Assuming the 90 days trading horizon Sinopec Shanghai Petrochemical is expected to generate 2.29 times more return on investment than Heidelberg Materials. However, Sinopec Shanghai is 2.29 times more volatile than Heidelberg Materials AG. It trades about 0.02 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about -0.08 per unit of risk. If you would invest 14.00 in Sinopec Shanghai Petrochemical on October 11, 2024 and sell it today you would earn a total of 0.00 from holding Sinopec Shanghai Petrochemical or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinopec Shanghai Petrochemical vs. Heidelberg Materials AG
Performance |
| Timeline |
| Sinopec Shanghai Pet |
| Heidelberg Materials |
Sinopec Shanghai and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinopec Shanghai and Heidelberg Materials
The main advantage of trading using opposite Sinopec Shanghai and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinopec Shanghai position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.| Sinopec Shanghai vs. MCEWEN MINING INC | Sinopec Shanghai vs. De Grey Mining | Sinopec Shanghai vs. USWE SPORTS AB | Sinopec Shanghai vs. GALENA MINING LTD |
| Heidelberg Materials vs. Sinopec Shanghai Petrochemical | Heidelberg Materials vs. MOLSON RS BEVERAGE | Heidelberg Materials vs. PTT Global Chemical | Heidelberg Materials vs. TIANDE CHEMICAL |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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