Correlation Between Pentamaster Bhd and Heineken Bhd

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

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

Diversification Opportunities for Pentamaster Bhd and Heineken Bhd

0.29

Correlation Coefficient

Pentamaster Bhd  Heineken Bhd

Modest diversification

The 3 months correlation between Pentamaster and Heineken is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Pentamaster Bhd and Heineken Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Bhd and Pentamaster Bhd 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 Pentamaster Bhd are associated (or correlated) with Heineken Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Bhd has no effect on the direction of Pentamaster Bhd i.e., Pentamaster Bhd and Heineken Bhd go up and down completely randomly.

Pair Corralation between Pentamaster Bhd and Heineken Bhd

Assuming the 90 days trading horizon Pentamaster Bhd is expected to generate 1.41 times more return on investment than Heineken Bhd. However, Pentamaster Bhd is 1.41 times more volatile than Heineken Bhd. It trades about 0.01 of its potential returns per unit of risk. Heineken Bhd is currently generating about 0.0 per unit of risk. If you would invest  427.00  in Pentamaster Bhd on September 28, 2024 and sell it today you would lose (4.00) from holding Pentamaster Bhd or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.81%
Values	Daily Returns

Pentamaster Bhd  vs.  Heineken Bhd

Pentamaster Bhd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pentamaster Bhd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pentamaster Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

Heineken Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Heineken Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pentamaster Bhd and Heineken Bhd

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

The idea behind Pentamaster Bhd and Heineken Bhd 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.