Correlation Between Heidelberg Materials and Talanx AG

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

Diversification Opportunities for Heidelberg Materials and Talanx AG

0.65

Correlation Coefficient

Heidelberg Materials  Talanx AG

Poor diversification

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

Pair Corralation between Heidelberg Materials and Talanx AG

Assuming the 90 days horizon Heidelberg Materials AG is expected to under-perform the Talanx AG. But the stock apears to be less risky and, when comparing its historical volatility, Heidelberg Materials AG is 1.13 times less risky than Talanx AG. The stock trades about -0.08 of its potential returns per unit of risk. The Talanx AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8,125  in Talanx AG on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Talanx AG or generate 0.0% 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.  Talanx AG

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

Talanx AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Talanx AG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heidelberg Materials and Talanx AG

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

The idea behind Heidelberg Materials AG and Talanx AG 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 CEOs Directory module to screen CEOs from public companies around the world.