Correlation Between Heineken Bhd and Bonia Bhd

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

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

Diversification Opportunities for Heineken Bhd and Bonia Bhd

-0.56

Correlation Coefficient

Heineken Bhd  Bonia Bhd

Excellent diversification

The 3 months correlation between Heineken and Bonia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and Bonia Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonia 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 Bonia Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonia Bhd has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and Bonia Bhd go up and down completely randomly.

Pair Corralation between Heineken Bhd and Bonia Bhd

Assuming the 90 days trading horizon Heineken Bhd is expected to generate 0.47 times more return on investment than Bonia Bhd. However, Heineken Bhd is 2.12 times less risky than Bonia Bhd. It trades about -0.02 of its potential returns per unit of risk. Bonia Bhd is currently generating about -0.29 per unit of risk. If you would invest  2,398  in Heineken Bhd on September 29, 2024 and sell it today you would lose (8.00) from holding Heineken Bhd or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Heineken Bhd  vs.  Bonia Bhd

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.

Bonia Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonia 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 January 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 Bonia Bhd

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

The idea behind Heineken Bhd and Bonia 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.