Correlation Between Heidelberg Materials and Dno ASA

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

Diversification Opportunities for Heidelberg Materials and Dno ASA

0.77

Correlation Coefficient

Heidelberg Materials  Dno ASA

Poor diversification

The 3 months correlation between Heidelberg and Dno is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA 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 Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Dno ASA go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Dno ASA

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 0.86 times more return on investment than Dno ASA. However, Heidelberg Materials AG is 1.16 times less risky than Dno ASA. It trades about 0.3 of its potential returns per unit of risk. Dno ASA is currently generating about 0.04 per unit of risk. If you would invest  9,398  in Heidelberg Materials AG on September 14, 2024 and sell it today you would earn a total of  3,287  from holding Heidelberg Materials AG or generate 34.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Heidelberg Materials AG  vs.  Dno ASA

Heidelberg Materials

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Dno ASA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dno ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dno ASA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heidelberg Materials and Dno ASA

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

The idea behind Heidelberg Materials AG and Dno ASA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..