Correlation Between Heidelberg Materials and Fresenius

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

Diversification Opportunities for Heidelberg Materials and Fresenius

-0.11

Correlation Coefficient

Heidelberg Materials  Fresenius

Good diversification

The 3 months correlation between Heidelberg and Fresenius is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Fresenius SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresenius SE 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 Fresenius. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresenius SE has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Fresenius go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Fresenius

Assuming the 90 days horizon Heidelberg Materials AG is expected to under-perform the Fresenius. In addition to that, Heidelberg Materials is 1.04 times more volatile than Fresenius SE Co. It trades about -0.08 of its total potential returns per unit of risk. Fresenius SE Co is currently generating about 0.07 per unit of volatility. If you would invest  3,374  in Fresenius SE Co on October 9, 2024 and sell it today you would earn a total of  48.00  from holding Fresenius SE Co or generate 1.42% 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.  Fresenius SE Co

Heidelberg Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 17 (%) 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.

Fresenius SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresenius SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Fresenius is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heidelberg Materials and Fresenius

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

The idea behind Heidelberg Materials AG and Fresenius SE Co 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.