Correlation Between Heidelberg Materials and Nok Airlines

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

Diversification Opportunities for Heidelberg Materials and Nok Airlines

0.0

Correlation Coefficient

Heidelberg Materials  Nok Airlines

Pay attention - limited upside

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

Pair Corralation between Heidelberg Materials and Nok Airlines

If you would invest  5,361  in Heidelberg Materials AG on September 25, 2024 and sell it today you would earn a total of  6,559  from holding Heidelberg Materials AG or generate 122.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Heidelberg Materials AG  vs.  Nok Airlines PCL

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. Despite nearly fragile basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Nok Airlines PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nok Airlines PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nok Airlines 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 Nok Airlines

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

The idea behind Heidelberg Materials AG and Nok Airlines PCL 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.