Correlation Between Heidelberg Materials and Singapore Telecommunicatio

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

Diversification Opportunities for Heidelberg Materials and Singapore Telecommunicatio

HeidelbergSingaporeDiversified AwayHeidelbergSingaporeDiversified Away100%
0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Heidelberg and Singapore is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Singapore Telecommunicatio go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Singapore Telecommunicatio

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 1.02 times more return on investment than Singapore Telecommunicatio. However, Heidelberg Materials is 1.02 times more volatile than Singapore Telecommunications Limited. It trades about 0.3 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.09 per unit of risk. If you would invest  10,100  in Heidelberg Materials AG on October 31, 2024 and sell it today you would earn a total of  3,385  from holding Heidelberg Materials AG or generate 33.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Heidelberg Materials AG  vs.  Singapore Telecommunications L

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15HEI SIT4
       Timeline  
Heidelberg Materials 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan100105110115120125130135
Singapore Telecommunicatio 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Telecommunications Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Singapore Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2.12.152.22.25

Heidelberg Materials and Singapore Telecommunicatio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.82-3.61-2.4-1.190.02341.412.814.225.63 0.050.100.15
JavaScript chart by amCharts 3.21.15HEI SIT4
       Returns  

Pair Trading with Heidelberg Materials and Singapore Telecommunicatio

The main advantage of trading using opposite Heidelberg Materials and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Materials position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.
The idea behind Heidelberg Materials AG and Singapore Telecommunications Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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