Correlation Between Grupo Aval and Heineken

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

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

Diversification Opportunities for Grupo Aval and Heineken

-0.86

Correlation Coefficient

Grupo Aval  Heineken

Pay attention - limited upside

The 3 months correlation between Grupo and Heineken is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Grupo Aval 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 Grupo Aval Acciones 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 Grupo Aval i.e., Grupo Aval and Heineken go up and down completely randomly.

Pair Corralation between Grupo Aval and Heineken

Assuming the 90 days trading horizon Grupo Aval Acciones is expected to generate 1.32 times more return on investment than Heineken. However, Grupo Aval is 1.32 times more volatile than Heineken NV. It trades about 0.04 of its potential returns per unit of risk. Heineken NV is currently generating about -0.1 per unit of risk. If you would invest  191.00  in Grupo Aval Acciones on September 27, 2024 and sell it today you would earn a total of  2.00  from holding Grupo Aval Acciones or generate 1.05% return on investment over 90 days.

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

Grupo Aval Acciones  vs.  Heineken NV

Grupo Aval Acciones

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Aval Acciones are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grupo Aval may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grupo Aval and Heineken

The main advantage of trading using opposite Grupo Aval and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval 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 Grupo Aval Acciones 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.