Correlation Between Heidelberg Materials and DAIKIN INDUSTRUNSPADR

Can any of the company-specific risk be diversified away by investing in both Heidelberg Materials and DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR, you can compare the effects of market volatilities on Heidelberg Materials and DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Materials and DAIKIN INDUSTRUNSPADR.

Diversification Opportunities for Heidelberg Materials and DAIKIN INDUSTRUNSPADR

-0.38

Correlation Coefficient

Heidelberg Materials  DAIKIN INDUSTRUNSPADR

Very good diversification

The 3 months correlation between Heidelberg and DAIKIN is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and DAIKIN INDUSTRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIKIN INDUSTRUNSPADR has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and DAIKIN INDUSTRUNSPADR go up and down completely randomly.

Pair Corralation between Heidelberg Materials and DAIKIN INDUSTRUNSPADR

Assuming the 90 days trading horizon Heidelberg Materials AG is expected to generate 1.16 times more return on investment than DAIKIN INDUSTRUNSPADR. However, Heidelberg Materials is 1.16 times more volatile than DAIKIN INDUSTRUNSPADR. It trades about 0.02 of its potential returns per unit of risk. DAIKIN INDUSTRUNSPADR is currently generating about -0.12 per unit of risk. If you would invest  11,830  in Heidelberg Materials AG on September 22, 2024 and sell it today you would earn a total of  65.00  from holding Heidelberg Materials AG or generate 0.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Heidelberg Materials AG  vs.  DAIKIN INDUSTRUNSPADR

Heidelberg Materials

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Heidelberg Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

DAIKIN INDUSTRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DAIKIN INDUSTRUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, DAIKIN INDUSTRUNSPADR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heidelberg Materials and DAIKIN INDUSTRUNSPADR

The main advantage of trading using opposite Heidelberg Materials and DAIKIN INDUSTRUNSPADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, DAIKIN INDUSTRUNSPADR 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 DAIKIN INDUSTRUNSPADR will offset losses from the drop in DAIKIN INDUSTRUNSPADR's long position.

The idea behind Heidelberg Materials AG and DAIKIN INDUSTRUNSPADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.