Correlation Between Heidelberg Materials and CHINA TONTINE

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

Diversification Opportunities for Heidelberg Materials and CHINA TONTINE

0.0

Correlation Coefficient

Heidelberg Materials  CHINA TONTINE

Pay attention - limited upside

The 3 months correlation between Heidelberg and CHINA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and CHINA TONTINE WINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TONTINE WINES 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 CHINA TONTINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TONTINE WINES has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and CHINA TONTINE go up and down completely randomly.

Pair Corralation between Heidelberg Materials and CHINA TONTINE

If you would invest  9,898  in Heidelberg Materials AG on September 23, 2024 and sell it today you would earn a total of  2,022  from holding Heidelberg Materials AG or generate 20.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Heidelberg Materials AG  vs.  CHINA TONTINE WINES

Heidelberg Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 14 (%) 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.

CHINA TONTINE WINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA TONTINE WINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, CHINA TONTINE 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 CHINA TONTINE

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

The idea behind Heidelberg Materials AG and CHINA TONTINE WINES 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.