Correlation Between Heidelberg Materials and REGAL ASIAN

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

Diversification Opportunities for Heidelberg Materials and REGAL ASIAN

-0.2

Correlation Coefficient

Heidelberg Materials  REGAL ASIAN

Good diversification

The 3 months correlation between Heidelberg and REGAL is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and REGAL ASIAN INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL ASIAN INVESTMENTS 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 REGAL ASIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL ASIAN INVESTMENTS has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and REGAL ASIAN go up and down completely randomly.

Pair Corralation between Heidelberg Materials and REGAL ASIAN

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 0.85 times more return on investment than REGAL ASIAN. However, Heidelberg Materials AG is 1.18 times less risky than REGAL ASIAN. It trades about 0.19 of its potential returns per unit of risk. REGAL ASIAN INVESTMENTS is currently generating about -0.33 per unit of risk. If you would invest  11,805  in Heidelberg Materials AG on September 20, 2024 and sell it today you would earn a total of  540.00  from holding Heidelberg Materials AG or generate 4.57% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  REGAL ASIAN INVESTMENTS

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

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, REGAL ASIAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heidelberg Materials and REGAL ASIAN

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

The idea behind Heidelberg Materials AG and REGAL ASIAN INVESTMENTS 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.