Correlation Between Heidelberg Materials and S A P

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

Diversification Opportunities for Heidelberg Materials and S A P

0.49

Correlation Coefficient

Heidelberg Materials  S A P

Very weak diversification

The 3 months correlation between Heidelberg and SAP is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Heidelberg Materials AG and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Heidelberg Materials i.e., Heidelberg Materials and S A P go up and down completely randomly.

Pair Corralation between Heidelberg Materials and S A P

Assuming the 90 days horizon Heidelberg Materials AG is expected to generate 1.17 times more return on investment than S A P. However, Heidelberg Materials is 1.17 times more volatile than SAP SE. It trades about 0.18 of its potential returns per unit of risk. SAP SE is currently generating about 0.18 per unit of risk. If you would invest  15,997  in Heidelberg Materials AG on April 20, 2025 and sell it today you would earn a total of  3,758  from holding Heidelberg Materials AG or generate 23.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Heidelberg Materials AG  vs.  SAP SE

Heidelberg Materials

Risk-Adjusted Performance

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

SAP SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, S A P reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heidelberg Materials and S A P

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

The idea behind Heidelberg Materials AG and SAP SE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.