Correlation Between Summit Materials and HeidelbergCement
Can any of the company-specific risk be diversified away by investing in both Summit Materials and HeidelbergCement 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 Summit Materials and HeidelbergCement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and HeidelbergCement AG ADR, you can compare the effects of market volatilities on Summit Materials and HeidelbergCement 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 Summit Materials with a short position of HeidelbergCement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and HeidelbergCement.
Diversification Opportunities for Summit Materials and HeidelbergCement
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and HeidelbergCement is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and HeidelbergCement AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeidelbergCement AG ADR and Summit 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 Summit Materials are associated (or correlated) with HeidelbergCement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeidelbergCement AG ADR has no effect on the direction of Summit Materials i.e., Summit Materials and HeidelbergCement go up and down completely randomly.
Pair Corralation between Summit Materials and HeidelbergCement
Considering the 90-day investment horizon Summit Materials is expected to generate 1.12 times less return on investment than HeidelbergCement. In addition to that, Summit Materials is 1.22 times more volatile than HeidelbergCement AG ADR. It trades about 0.26 of its total potential returns per unit of risk. HeidelbergCement AG ADR is currently generating about 0.36 per unit of volatility. If you would invest 2,176 in HeidelbergCement AG ADR on August 27, 2024 and sell it today you would earn a total of 332.00 from holding HeidelbergCement AG ADR or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. HeidelbergCement AG ADR
Performance |
| Timeline |
| Summit Materials |
| HeidelbergCement AG ADR |
Summit Materials and HeidelbergCement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and HeidelbergCement
The main advantage of trading using opposite Summit Materials and HeidelbergCement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, HeidelbergCement 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 HeidelbergCement will offset losses from the drop in HeidelbergCement's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| HeidelbergCement vs. Anhui Conch Cement | HeidelbergCement vs. Holcim | HeidelbergCement vs. Buzzi Unicem SpA | HeidelbergCement vs. Wienerberger Baustoffindustrie |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |