Correlation Between AXA SA and Heidelberg Materials

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

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

Diversification Opportunities for AXA SA and Heidelberg Materials

-0.71

Correlation Coefficient

AXA SA  Heidelberg Materials

Pay attention - limited upside

The 3 months correlation between AXA and Heidelberg is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and AXA SA 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 AXA SA are associated (or correlated) with Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of AXA SA i.e., AXA SA and Heidelberg Materials go up and down completely randomly.

Pair Corralation between AXA SA and Heidelberg Materials

Assuming the 90 days trading horizon AXA SA is expected to generate 0.64 times more return on investment than Heidelberg Materials. However, AXA SA is 1.56 times less risky than Heidelberg Materials. It trades about 0.15 of its potential returns per unit of risk. Heidelberg Materials AG is currently generating about -0.08 per unit of risk. If you would invest  3,407  in AXA SA on October 10, 2024 and sell it today you would earn a total of  71.00  from holding AXA SA or generate 2.08% return on investment over 90 days.

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

AXA SA  vs.  Heidelberg Materials AG

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AXA SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Heidelberg Materials

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AXA SA and Heidelberg Materials

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

The idea behind AXA SA and Heidelberg Materials AG 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..