Correlation Between VARIOUS EATERIES and Heineken

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

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

Diversification Opportunities for VARIOUS EATERIES and Heineken

0.7

Correlation Coefficient

VARIOUS EATERIES  Heineken

Poor diversification

The 3 months correlation between VARIOUS and Heineken is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and Heineken go up and down completely randomly.

Pair Corralation between VARIOUS EATERIES and Heineken

Assuming the 90 days horizon VARIOUS EATERIES LS is expected to generate 1.14 times more return on investment than Heineken. However, VARIOUS EATERIES is 1.14 times more volatile than Heineken NV. It trades about -0.17 of its potential returns per unit of risk. Heineken NV is currently generating about -0.24 per unit of risk. If you would invest  21.00  in VARIOUS EATERIES LS on October 25, 2024 and sell it today you would lose (3.00) from holding VARIOUS EATERIES LS or give up 14.29% of portfolio value over 90 days.

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

VARIOUS EATERIES LS  vs.  Heineken NV

VARIOUS EATERIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VARIOUS EATERIES LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators 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.

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 fragile 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 VARIOUS EATERIES and Heineken

The main advantage of trading using opposite VARIOUS EATERIES and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.