Correlation Between Heidelberg Pharma and GRUPO CARSO-A1

Can any of the company-specific risk be diversified away by investing in both Heidelberg Pharma and GRUPO CARSO-A1 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 Pharma and GRUPO CARSO-A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heidelberg Pharma AG and GRUPO CARSO A1, you can compare the effects of market volatilities on Heidelberg Pharma and GRUPO CARSO-A1 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 Pharma with a short position of GRUPO CARSO-A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heidelberg Pharma and GRUPO CARSO-A1.

Diversification Opportunities for Heidelberg Pharma and GRUPO CARSO-A1

0.18

Correlation Coefficient

Heidelberg Pharma  GRUPO CARSO-A1

Average diversification

The 3 months correlation between Heidelberg and GRUPO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Pharma AG and GRUPO CARSO A1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRUPO CARSO A1 and Heidelberg Pharma 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 Pharma AG are associated (or correlated) with GRUPO CARSO-A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRUPO CARSO A1 has no effect on the direction of Heidelberg Pharma i.e., Heidelberg Pharma and GRUPO CARSO-A1 go up and down completely randomly.

Pair Corralation between Heidelberg Pharma and GRUPO CARSO-A1

Assuming the 90 days trading horizon Heidelberg Pharma AG is expected to under-perform the GRUPO CARSO-A1. But the stock apears to be less risky and, when comparing its historical volatility, Heidelberg Pharma AG is 1.55 times less risky than GRUPO CARSO-A1. The stock trades about -0.03 of its potential returns per unit of risk. The GRUPO CARSO A1 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  306.00  in GRUPO CARSO A1 on October 24, 2024 and sell it today you would earn a total of  229.00  from holding GRUPO CARSO A1 or generate 74.84% return on investment over 90 days.

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

Heidelberg Pharma AG  vs.  GRUPO CARSO A1

Heidelberg Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heidelberg Pharma AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Heidelberg Pharma is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GRUPO CARSO A1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRUPO CARSO A1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GRUPO CARSO-A1 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heidelberg Pharma and GRUPO CARSO-A1

The main advantage of trading using opposite Heidelberg Pharma and GRUPO CARSO-A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heidelberg Pharma position performs unexpectedly, GRUPO CARSO-A1 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 GRUPO CARSO-A1 will offset losses from the drop in GRUPO CARSO-A1's long position.

The idea behind Heidelberg Pharma AG and GRUPO CARSO A1 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.