Correlation Between HeidelbergCement and Superior Plus

Can any of the company-specific risk be diversified away by investing in both HeidelbergCement and Superior Plus 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 HeidelbergCement and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HeidelbergCement AG and Superior Plus Corp, you can compare the effects of market volatilities on HeidelbergCement and Superior Plus 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 HeidelbergCement with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeidelbergCement and Superior Plus.

Diversification Opportunities for HeidelbergCement and Superior Plus

-0.85

Correlation Coefficient

HeidelbergCement  Superior Plus

Pay attention - limited upside

The 3 months correlation between HeidelbergCement and Superior is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding HeidelbergCement AG and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and HeidelbergCement 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 HeidelbergCement AG are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of HeidelbergCement i.e., HeidelbergCement and Superior Plus go up and down completely randomly.

Pair Corralation between HeidelbergCement and Superior Plus

Assuming the 90 days trading horizon HeidelbergCement AG is expected to generate 0.45 times more return on investment than Superior Plus. However, HeidelbergCement AG is 2.21 times less risky than Superior Plus. It trades about 0.31 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.05 per unit of risk. If you would invest  9,182  in HeidelbergCement AG on September 5, 2024 and sell it today you would earn a total of  3,203  from holding HeidelbergCement AG or generate 34.88% return on investment over 90 days.

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

HeidelbergCement AG  vs.  Superior Plus Corp

HeidelbergCement

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HeidelbergCement AG are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, HeidelbergCement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with HeidelbergCement and Superior Plus

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

The idea behind HeidelbergCement AG and Superior Plus Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.