Correlation Between Heidelberg Materials and BANK RAKYAT

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

Diversification Opportunities for Heidelberg Materials and BANK RAKYAT

-0.7

Correlation Coefficient

Heidelberg Materials  BANK RAKYAT

Excellent diversification

The 3 months correlation between Heidelberg and BANK is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and BANK RAKYAT go up and down completely randomly.

Pair Corralation between Heidelberg Materials and BANK RAKYAT

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 2.6 times more return on investment than BANK RAKYAT. However, Heidelberg Materials is 2.6 times more volatile than BANK RAKYAT IND. It trades about 0.18 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.13 per unit of risk. If you would invest  12,045  in Heidelberg Materials AG on December 22, 2024 and sell it today you would earn a total of  6,055  from holding Heidelberg Materials AG or generate 50.27% 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.  BANK RAKYAT IND

Heidelberg Materials

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

BANK RAKYAT IND

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Heidelberg Materials and BANK RAKYAT

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

The idea behind Heidelberg Materials AG and BANK RAKYAT IND 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.