Correlation Between Heineken Bhd and Notion Vtec

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

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

Diversification Opportunities for Heineken Bhd and Notion Vtec

0.61

Correlation Coefficient

Heineken Bhd  Notion Vtec

Poor diversification

The 3 months correlation between Heineken and Notion is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and Notion Vtec Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Notion Vtec Bhd and Heineken Bhd 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 Heineken Bhd are associated (or correlated) with Notion Vtec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Notion Vtec Bhd has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and Notion Vtec go up and down completely randomly.

Pair Corralation between Heineken Bhd and Notion Vtec

Assuming the 90 days trading horizon Heineken Bhd is expected to generate 19.2 times less return on investment than Notion Vtec. But when comparing it to its historical volatility, Heineken Bhd is 6.95 times less risky than Notion Vtec. It trades about 0.08 of its potential returns per unit of risk. Notion Vtec Bhd is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Notion Vtec Bhd on September 25, 2024 and sell it today you would earn a total of  20.00  from holding Notion Vtec Bhd or generate 18.18% return on investment over 90 days.

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

Heineken Bhd  vs.  Notion Vtec Bhd

Heineken Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Bhd are ranked lower than 6 (%) 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 January 2025.

Notion Vtec Bhd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Notion Vtec Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Notion Vtec disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heineken Bhd and Notion Vtec

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

The idea behind Heineken Bhd and Notion Vtec 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.