Correlation Between Heidelberg Materials and LABYRINTH RESOURCES

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

Diversification Opportunities for Heidelberg Materials and LABYRINTH RESOURCES

0.41

Correlation Coefficient

Heidelberg Materials  LABYRINTH RESOURCES

Very weak diversification

The 3 months correlation between Heidelberg and LABYRINTH is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and LABYRINTH RESOURCES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LABYRINTH RESOURCES LTD 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 LABYRINTH RESOURCES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LABYRINTH RESOURCES LTD has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and LABYRINTH RESOURCES go up and down completely randomly.

Pair Corralation between Heidelberg Materials and LABYRINTH RESOURCES

Assuming the 90 days horizon Heidelberg Materials is expected to generate 32.51 times less return on investment than LABYRINTH RESOURCES. But when comparing it to its historical volatility, Heidelberg Materials AG is 33.61 times less risky than LABYRINTH RESOURCES. It trades about 0.11 of its potential returns per unit of risk. LABYRINTH RESOURCES LTD is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.31  in LABYRINTH RESOURCES LTD on October 4, 2024 and sell it today you would earn a total of  3.69  from holding LABYRINTH RESOURCES LTD or generate 111.48% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  LABYRINTH RESOURCES LTD

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.

LABYRINTH RESOURCES LTD

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LABYRINTH RESOURCES LTD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LABYRINTH RESOURCES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heidelberg Materials and LABYRINTH RESOURCES

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

The idea behind Heidelberg Materials AG and LABYRINTH RESOURCES LTD 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.