Correlation Between CHINA TONTINE and Heidelberg Materials

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

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

Diversification Opportunities for CHINA TONTINE and Heidelberg Materials

0.0

Correlation Coefficient

CHINA TONTINE  Heidelberg Materials

Pay attention - limited upside

The 3 months correlation between CHINA and Heidelberg is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and CHINA TONTINE 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 CHINA TONTINE WINES 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 CHINA TONTINE i.e., CHINA TONTINE and Heidelberg Materials go up and down completely randomly.

Pair Corralation between CHINA TONTINE and Heidelberg Materials

If you would invest  9,554  in Heidelberg Materials AG on September 22, 2024 and sell it today you would earn a total of  2,366  from holding Heidelberg Materials AG or generate 24.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.24%
Values	Daily Returns

CHINA TONTINE WINES  vs.  Heidelberg Materials AG

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.

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.

Pair Trading with CHINA TONTINE and Heidelberg Materials

The main advantage of trading using opposite CHINA TONTINE and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE 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 CHINA TONTINE WINES 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.