Correlation Between Heineken Holding and HEINEKEN

Can any of the company-specific risk be diversified away by investing in both Heineken Holding 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 Heineken Holding and HEINEKEN 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 HEINEKEN SP ADR, you can compare the effects of market volatilities on Heineken Holding 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 Heineken Holding with a short position of HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Holding and HEINEKEN.

Diversification Opportunities for Heineken Holding and HEINEKEN

0.94

Correlation Coefficient

Heineken Holding  HEINEKEN

Almost no diversification

The 3 months correlation between Heineken and HEINEKEN is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR 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 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 SP ADR has no effect on the direction of Heineken Holding i.e., Heineken Holding and HEINEKEN go up and down completely randomly.

Pair Corralation between Heineken Holding and HEINEKEN

Assuming the 90 days horizon Heineken Holding NV is expected to generate 1.14 times more return on investment than HEINEKEN. However, Heineken Holding is 1.14 times more volatile than HEINEKEN SP ADR. It trades about 0.11 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about 0.08 per unit of risk. If you would invest  5,785  in Heineken Holding NV on December 30, 2024 and sell it today you would earn a total of  790.00  from holding Heineken Holding NV or generate 13.66% return on investment over 90 days.

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

Heineken Holding NV  vs.  HEINEKEN SP ADR

Heineken Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Holding NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heineken Holding reported solid returns over the last few months and may actually be approaching a breakup point.

HEINEKEN SP ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HEINEKEN SP ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, HEINEKEN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Heineken Holding and HEINEKEN

The main advantage of trading using opposite Heineken Holding and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken Holding 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 Heineken Holding NV and HEINEKEN SP ADR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.