Correlation Between ECM Libra and Heineken Bhd

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

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

Diversification Opportunities for ECM Libra and Heineken Bhd

0.02

Correlation Coefficient

ECM Libra  Heineken Bhd

Significant diversification

The 3 months correlation between ECM and Heineken is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ECM Libra Financial and Heineken Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Bhd and ECM Libra 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 ECM Libra Financial 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 ECM Libra i.e., ECM Libra and Heineken Bhd go up and down completely randomly.

Pair Corralation between ECM Libra and Heineken Bhd

Assuming the 90 days trading horizon ECM Libra Financial is expected to under-perform the Heineken Bhd. In addition to that, ECM Libra is 4.31 times more volatile than Heineken Bhd. It trades about 0.0 of its total potential returns per unit of risk. Heineken Bhd is currently generating about 0.15 per unit of volatility. If you would invest  2,290  in Heineken Bhd on October 26, 2024 and sell it today you would earn a total of  188.00  from holding Heineken Bhd or generate 8.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ECM Libra Financial  vs.  Heineken Bhd

ECM Libra Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECM Libra Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ECM Libra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Heineken Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Bhd are ranked lower than 11 (%) 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 February 2025.

Pair Trading with ECM Libra and Heineken Bhd

The main advantage of trading using opposite ECM Libra and Heineken Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECM Libra 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 ECM Libra Financial 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.