Correlation Between Heidelberg Materials and BANK HANDLOWY

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

Diversification Opportunities for Heidelberg Materials and BANK HANDLOWY

-0.55

Correlation Coefficient

Heidelberg Materials  BANK HANDLOWY

Excellent diversification

The 3 months correlation between Heidelberg and BANK is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Heidelberg Materials and BANK HANDLOWY

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 2.17 times more return on investment than BANK HANDLOWY. However, Heidelberg Materials is 2.17 times more volatile than BANK HANDLOWY. It trades about 0.31 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.04 per unit of risk. If you would invest  9,294  in Heidelberg Materials AG on September 13, 2024 and sell it today you would earn a total of  3,391  from holding Heidelberg Materials AG or generate 36.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Heidelberg Materials AG  vs.  BANK HANDLOWY

Heidelberg Materials

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

BANK HANDLOWY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BANK HANDLOWY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heidelberg Materials and BANK HANDLOWY

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

The idea behind Heidelberg Materials AG and BANK HANDLOWY 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.