Correlation Between Perusahaan Perseroan and Heidelberg Materials

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

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

Diversification Opportunities for Perusahaan Perseroan and Heidelberg Materials

-0.66

Correlation Coefficient

Perusahaan Perseroan  Heidelberg Materials

Excellent diversification

The 3 months correlation between Perusahaan and Heidelberg is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and Heidelberg Materials go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and Heidelberg Materials

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the Heidelberg Materials. In addition to that, Perusahaan Perseroan is 1.65 times more volatile than Heidelberg Materials AG. It trades about -0.02 of its total potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.19 per unit of volatility. If you would invest  9,888  in Heidelberg Materials AG on October 9, 2024 and sell it today you would earn a total of  2,152  from holding Heidelberg Materials AG or generate 21.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Perusahaan Perseroan PT  vs.  Heidelberg Materials AG

Perusahaan Perseroan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perusahaan Perseroan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Heidelberg Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Materials AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Heidelberg Materials exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perusahaan Perseroan and Heidelberg Materials

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

The idea behind Perusahaan Perseroan PT and Heidelberg Materials 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.