Correlation Between Leader Steel and Heineken Bhd

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

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

Diversification Opportunities for Leader Steel and Heineken Bhd

-0.46

Correlation Coefficient

Leader Steel  Heineken Bhd

Very good diversification

The 3 months correlation between Leader and Heineken is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings and Heineken Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Bhd and Leader Steel 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 Leader Steel Holdings 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 Leader Steel i.e., Leader Steel and Heineken Bhd go up and down completely randomly.

Pair Corralation between Leader Steel and Heineken Bhd

Assuming the 90 days trading horizon Leader Steel Holdings is expected to generate 2.79 times more return on investment than Heineken Bhd. However, Leader Steel is 2.79 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 0.01 per unit of risk. If you would invest  49.00  in Leader Steel Holdings on October 11, 2024 and sell it today you would lose (8.00) from holding Leader Steel Holdings or give up 16.33% of portfolio value over 90 days.

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

Leader Steel Holdings  vs.  Heineken Bhd

Leader Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leader Steel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Heineken Bhd

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Heineken Bhd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Leader Steel and Heineken Bhd

The main advantage of trading using opposite Leader Steel and Heineken Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Steel 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 Leader Steel Holdings 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.

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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..