Correlation Between Heineken Bhd and Sports Toto

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

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

Diversification Opportunities for Heineken Bhd and Sports Toto

-0.66

Correlation Coefficient

Heineken Bhd  Sports Toto

Excellent diversification

The 3 months correlation between Heineken and Sports is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and Sports Toto Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Toto Berhad 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 Sports Toto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Toto Berhad has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and Sports Toto go up and down completely randomly.

Pair Corralation between Heineken Bhd and Sports Toto

Assuming the 90 days trading horizon Heineken Bhd is expected to generate 1.12 times more return on investment than Sports Toto. However, Heineken Bhd is 1.12 times more volatile than Sports Toto Berhad. It trades about 0.06 of its potential returns per unit of risk. Sports Toto Berhad is currently generating about -0.07 per unit of risk. If you would invest  2,271  in Heineken Bhd on September 27, 2024 and sell it today you would earn a total of  95.00  from holding Heineken Bhd or generate 4.18% return on investment over 90 days.

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

Heineken Bhd  vs.  Sports Toto Berhad

Heineken Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Heineken Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sports Toto Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Heineken Bhd and Sports Toto

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

The idea behind Heineken Bhd and Sports Toto Berhad 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 Transaction History module to view history of all your transactions and understand their impact on performance.