Correlation Between SCIENCE IN and Heineken

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

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

Diversification Opportunities for SCIENCE IN and Heineken

0.77

Correlation Coefficient

SCIENCE IN  Heineken

Poor diversification

The 3 months correlation between SCIENCE and Heineken is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SCIENCE IN SPORT and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and SCIENCE IN 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 SCIENCE IN SPORT 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 SCIENCE IN i.e., SCIENCE IN and Heineken go up and down completely randomly.

Pair Corralation between SCIENCE IN and Heineken

Assuming the 90 days horizon SCIENCE IN SPORT is expected to under-perform the Heineken. In addition to that, SCIENCE IN is 1.32 times more volatile than Heineken NV. It trades about -0.02 of its total potential returns per unit of risk. Heineken NV is currently generating about 0.1 per unit of volatility. If you would invest  6,820  in Heineken NV on December 23, 2024 and sell it today you would earn a total of  920.00  from holding Heineken NV or generate 13.49% return on investment over 90 days.

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

SCIENCE IN SPORT  vs.  Heineken NV

SCIENCE IN SPORT

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCIENCE IN SPORT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SCIENCE IN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Heineken NV

Risk-Adjusted Performance

OK

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

Pair Trading with SCIENCE IN and Heineken

The main advantage of trading using opposite SCIENCE IN and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCIENCE IN 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 SCIENCE IN SPORT 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.