Correlation Between ES Ceramics and Heineken Bhd

Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Heineken Bhd 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 ES Ceramics and Heineken Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ES Ceramics Technology and Heineken Bhd, you can compare the effects of market volatilities on ES Ceramics and Heineken Bhd 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 ES Ceramics with a short position of Heineken Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Heineken Bhd.

Diversification Opportunities for ES Ceramics and Heineken Bhd

-0.84

Correlation Coefficient

ES Ceramics  Heineken Bhd

Pay attention - limited upside

The 3 months correlation between 0100 and Heineken is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Heineken Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Heineken Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and Heineken Bhd go up and down completely randomly.

Pair Corralation between ES Ceramics and Heineken Bhd

Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the Heineken Bhd. In addition to that, ES Ceramics is 3.06 times more volatile than Heineken Bhd. It trades about -0.12 of its total potential returns per unit of risk. Heineken Bhd is currently generating about 0.13 per unit of volatility. If you would invest  2,394  in Heineken Bhd on December 23, 2024 and sell it today you would earn a total of  266.00  from holding Heineken Bhd or generate 11.11% return on investment over 90 days.

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

ES Ceramics Technology  vs.  Heineken Bhd

ES Ceramics Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days ES Ceramics Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Heineken Bhd

Risk-Adjusted Performance

OK

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

Pair Trading with ES Ceramics and Heineken Bhd

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

The idea behind ES Ceramics Technology and Heineken Bhd 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.