Correlation Between Heineken Bhd and Media Prima

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

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

Diversification Opportunities for Heineken Bhd and Media Prima

-0.31

Correlation Coefficient

Heineken Bhd  Media Prima

Very good diversification

The 3 months correlation between Heineken and Media is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and Media Prima Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Prima 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 Media Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Prima Bhd has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and Media Prima go up and down completely randomly.

Pair Corralation between Heineken Bhd and Media Prima

Assuming the 90 days trading horizon Heineken Bhd is expected to generate 0.5 times more return on investment than Media Prima. However, Heineken Bhd is 1.99 times less risky than Media Prima. It trades about 0.16 of its potential returns per unit of risk. Media Prima Bhd is currently generating about -0.08 per unit of risk. If you would invest  2,362  in Heineken Bhd on December 26, 2024 and sell it today you would earn a total of  342.00  from holding Heineken Bhd or generate 14.48% return on investment over 90 days.

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

Heineken Bhd  vs.  Media Prima Bhd

Heineken Bhd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Bhd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Heineken Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

Media Prima Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Media Prima Bhd 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.

Pair Trading with Heineken Bhd and Media Prima

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

The idea behind Heineken Bhd and Media Prima 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.