Correlation Between Heidelberg Materials and MBANK (BRUSG)

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

Diversification Opportunities for Heidelberg Materials and MBANK (BRUSG)

-0.69

Correlation Coefficient

Heidelberg Materials  MBANK (BRUSG)

Excellent diversification

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

Pair Corralation between Heidelberg Materials and MBANK (BRUSG)

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 0.75 times more return on investment than MBANK (BRUSG). However, Heidelberg Materials AG is 1.33 times less risky than MBANK (BRUSG). It trades about 0.28 of its potential returns per unit of risk. MBANK is currently generating about -0.05 per unit of risk. If you would invest  9,748  in Heidelberg Materials AG on October 15, 2024 and sell it today you would earn a total of  2,897  from holding Heidelberg Materials AG or generate 29.72% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  MBANK

Heidelberg Materials

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 21 (%) 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.

MBANK (BRUSG)

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Heidelberg Materials and MBANK (BRUSG)

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

The idea behind Heidelberg Materials AG and MBANK 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.