Correlation Between Heidelberg Materials and Xinhua Winshare

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

Diversification Opportunities for Heidelberg Materials and Xinhua Winshare

0.65

Correlation Coefficient

Heidelberg Materials  Xinhua Winshare

Poor diversification

The 3 months correlation between Heidelberg and Xinhua is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ 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 Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and Xinhua Winshare go up and down completely randomly.

Pair Corralation between Heidelberg Materials and Xinhua Winshare

Assuming the 90 days horizon Heidelberg Materials AG is expected to under-perform the Xinhua Winshare. But the stock apears to be less risky and, when comparing its historical volatility, Heidelberg Materials AG is 1.73 times less risky than Xinhua Winshare. The stock trades about -0.08 of its potential returns per unit of risk. The Xinhua Winshare Publishing is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Xinhua Winshare Publishing on October 10, 2024 and sell it today you would earn a total of  17.00  from holding Xinhua Winshare Publishing or generate 13.82% return on investment over 90 days.

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

Heidelberg Materials AG  vs.  Xinhua Winshare Publishing

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 unsteady basic indicators, Heidelberg Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Xinhua Winshare Publ

Risk-Adjusted Performance

14 of 100

Solid

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

Pair Trading with Heidelberg Materials and Xinhua Winshare

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

The idea behind Heidelberg Materials AG and Xinhua Winshare Publishing 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.