Correlation Between Heidelberg Materials and Hyster-Yale Materials

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

Diversification Opportunities for Heidelberg Materials and Hyster-Yale Materials

-0.8

Correlation Coefficient

Heidelberg Materials  Hyster-Yale Materials

Pay attention - limited upside

The 3 months correlation between Heidelberg and Hyster-Yale is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale Materials 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 Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Hyster-Yale Materials go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Hyster-Yale Materials

Assuming the 90 days horizon Heidelberg Materials is expected to generate 1.05 times less return on investment than Hyster-Yale Materials. But when comparing it to its historical volatility, Heidelberg Materials AG is 2.2 times less risky than Hyster-Yale Materials. It trades about 0.11 of its potential returns per unit of risk. Hyster Yale Materials Handling is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,720  in Hyster Yale Materials Handling on October 5, 2024 and sell it today you would earn a total of  2,020  from holding Hyster Yale Materials Handling or generate 74.26% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  Hyster Yale Materials Handling

Heidelberg Materials

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Heidelberg Materials AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Heidelberg Materials and Hyster-Yale Materials

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

The idea behind Heidelberg Materials AG and Hyster Yale Materials Handling 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.