Correlation Between Heineken Holding and FOMECONMEXSAB DCV

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

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

Diversification Opportunities for Heineken Holding and FOMECONMEXSAB DCV

0.78

Correlation Coefficient

Heineken Holding  FOMECONMEXSAB DCV

Poor diversification

The 3 months correlation between Heineken and FOMECONMEXSAB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and FOMECONMEXSAB DCV UTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOMECONMEXSAB DCV UTS and Heineken Holding 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 Holding NV are associated (or correlated) with FOMECONMEXSAB DCV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOMECONMEXSAB DCV UTS has no effect on the direction of Heineken Holding i.e., Heineken Holding and FOMECONMEXSAB DCV go up and down completely randomly.

Pair Corralation between Heineken Holding and FOMECONMEXSAB DCV

Assuming the 90 days horizon Heineken Holding NV is expected to under-perform the FOMECONMEXSAB DCV. But the stock apears to be less risky and, when comparing its historical volatility, Heineken Holding NV is 1.56 times less risky than FOMECONMEXSAB DCV. The stock trades about -0.17 of its potential returns per unit of risk. The FOMECONMEXSAB DCV UTS is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  915.00  in FOMECONMEXSAB DCV UTS on September 3, 2024 and sell it today you would lose (100.00) from holding FOMECONMEXSAB DCV UTS or give up 10.93% of portfolio value over 90 days.

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

Heineken Holding NV  vs.  FOMECONMEXSAB DCV UTS

Heineken Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FOMECONMEXSAB DCV UTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOMECONMEXSAB DCV UTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Heineken Holding and FOMECONMEXSAB DCV

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

The idea behind Heineken Holding NV and FOMECONMEXSAB DCV UTS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.