Correlation Between Heineken Holding and Takara Holdings

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

Diversification Opportunities for Heineken Holding and Takara Holdings

-0.56

Correlation Coefficient

Heineken Holding  Takara Holdings

Excellent diversification

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

Pair Corralation between Heineken Holding and Takara Holdings

Assuming the 90 days horizon Heineken Holding NV is expected to generate 1.01 times more return on investment than Takara Holdings. However, Heineken Holding is 1.01 times more volatile than Takara Holdings. It trades about 0.16 of its potential returns per unit of risk. Takara Holdings is currently generating about -0.06 per unit of risk. If you would invest  5,730  in Heineken Holding NV on December 21, 2024 and sell it today you would earn a total of  1,140  from holding Heineken Holding NV or generate 19.9% return on investment over 90 days.

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

Heineken Holding NV  vs.  Takara Holdings

Heineken Holding

Risk-Adjusted Performance

Good

Over the last 90 days Heineken Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Heineken Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Takara Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Takara Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Heineken Holding and Takara Holdings

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

The idea behind Heineken Holding NV and Takara Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..