Correlation Between Heidelberg Materials and THAI BEVERAGE

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

Diversification Opportunities for Heidelberg Materials and THAI BEVERAGE

0.48

Correlation Coefficient

Heidelberg Materials  THAI BEVERAGE

Very weak diversification

The 3 months correlation between Heidelberg and THAI is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE 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 THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between Heidelberg Materials and THAI BEVERAGE

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 1.02 times more return on investment than THAI BEVERAGE. However, Heidelberg Materials is 1.02 times more volatile than THAI BEVERAGE. It trades about -0.01 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.19 per unit of risk. If you would invest  12,580  in Heidelberg Materials AG on October 13, 2024 and sell it today you would lose (75.00) from holding Heidelberg Materials AG or give up 0.6% of portfolio value over 90 days.

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

Heidelberg Materials AG  vs.  THAI BEVERAGE

Heidelberg Materials

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 20 (%) 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.

THAI BEVERAGE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THAI BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Heidelberg Materials and THAI BEVERAGE

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

The idea behind Heidelberg Materials AG and THAI BEVERAGE 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.