Correlation Between Heineken Bhd and Silver Ridge

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

By analyzing existing cross correlation between Heineken Bhd and Silver Ridge Holdings, you can compare the effects of market volatilities on Heineken Bhd and Silver Ridge 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 Silver Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Bhd and Silver Ridge.

Diversification Opportunities for Heineken Bhd and Silver Ridge

0.43

Correlation Coefficient

Heineken Bhd  Silver Ridge

Very weak diversification

The 3 months correlation between Heineken and Silver is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and Silver Ridge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Ridge Holdings 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 Silver Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Ridge Holdings has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and Silver Ridge go up and down completely randomly.

Pair Corralation between Heineken Bhd and Silver Ridge

Assuming the 90 days trading horizon Heineken Bhd is expected to generate 17.09 times less return on investment than Silver Ridge. But when comparing it to its historical volatility, Heineken Bhd is 3.8 times less risky than Silver Ridge. It trades about 0.02 of its potential returns per unit of risk. Silver Ridge Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Silver Ridge Holdings on September 25, 2024 and sell it today you would earn a total of  31.00  from holding Silver Ridge Holdings or generate 221.43% return on investment over 90 days.

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

Heineken Bhd  vs.  Silver Ridge Holdings

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.

Silver Ridge Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Ridge Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Silver Ridge disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heineken Bhd and Silver Ridge

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

The idea behind Heineken Bhd and Silver Ridge Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.