Correlation Between Heidelberg Materials and Clarkson PLC

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

Diversification Opportunities for Heidelberg Materials and Clarkson PLC

0.64

Correlation Coefficient

Heidelberg Materials  Clarkson PLC

Poor diversification

The 3 months correlation between Heidelberg and Clarkson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Clarkson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkson PLC 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 Clarkson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkson PLC has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Clarkson PLC go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Clarkson PLC

Assuming the 90 days horizon Heidelberg Materials AG is expected to under-perform the Clarkson PLC. But the stock apears to be less risky and, when comparing its historical volatility, Heidelberg Materials AG is 1.05 times less risky than Clarkson PLC. The stock trades about -0.08 of its potential returns per unit of risk. The Clarkson PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,760  in Clarkson PLC on October 4, 2024 and sell it today you would earn a total of  20.00  from holding Clarkson PLC or generate 0.42% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  Clarkson PLC

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

Clarkson PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkson PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Clarkson PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heidelberg Materials and Clarkson PLC

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

The idea behind Heidelberg Materials AG and Clarkson PLC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.