Correlation Between G8 EDUCATION and Heineken

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION and Heineken 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 G8 EDUCATION and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and Heineken NV, you can compare the effects of market volatilities on G8 EDUCATION and Heineken 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 G8 EDUCATION with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Heineken.

Diversification Opportunities for G8 EDUCATION and Heineken

0.54

Correlation Coefficient

G8 EDUCATION  Heineken

Very weak diversification

The 3 months correlation between 3EAG and Heineken is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and G8 EDUCATION 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 G8 EDUCATION are associated (or correlated) with Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of G8 EDUCATION i.e., G8 EDUCATION and Heineken go up and down completely randomly.

Pair Corralation between G8 EDUCATION and Heineken

Assuming the 90 days trading horizon G8 EDUCATION is expected to under-perform the Heineken. In addition to that, G8 EDUCATION is 1.18 times more volatile than Heineken NV. It trades about -0.33 of its total potential returns per unit of risk. Heineken NV is currently generating about -0.09 per unit of volatility. If you would invest  6,946  in Heineken NV on October 10, 2024 and sell it today you would lose (146.00) from holding Heineken NV or give up 2.1% of portfolio value over 90 days.

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

G8 EDUCATION  vs.  Heineken NV

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Heineken NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with G8 EDUCATION and Heineken

The main advantage of trading using opposite G8 EDUCATION and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.

The idea behind G8 EDUCATION and Heineken NV 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.