Correlation Between Commercial Vehicle and Heidelberg Pharma

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

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

Diversification Opportunities for Commercial Vehicle and Heidelberg Pharma

0.69

Correlation Coefficient

Commercial Vehicle  Heidelberg Pharma

Poor diversification

The 3 months correlation between Commercial and Heidelberg is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Heidelberg Pharma AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Pharma and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Heidelberg Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Pharma has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Heidelberg Pharma go up and down completely randomly.

Pair Corralation between Commercial Vehicle and Heidelberg Pharma

Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the Heidelberg Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 1.08 times less risky than Heidelberg Pharma. The stock trades about -0.03 of its potential returns per unit of risk. The Heidelberg Pharma AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  244.00  in Heidelberg Pharma AG on October 9, 2024 and sell it today you would lose (2.00) from holding Heidelberg Pharma AG or give up 0.82% of portfolio value over 90 days.

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

Commercial Vehicle Group  vs.  Heidelberg Pharma AG

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Heidelberg Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heidelberg Pharma AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Heidelberg Pharma 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 Commercial Vehicle and Heidelberg Pharma

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

The idea behind Commercial Vehicle Group and Heidelberg Pharma 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.