Correlation Between Carlsberg A/S and Heineken Holding

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

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

Diversification Opportunities for Carlsberg A/S and Heineken Holding

0.95

Correlation Coefficient

Carlsberg A/S  Heineken Holding

Almost no diversification

The 3 months correlation between Carlsberg and Heineken is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Carlsberg A/S 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 Carlsberg AS are associated (or correlated) with Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Carlsberg A/S i.e., Carlsberg A/S and Heineken Holding go up and down completely randomly.

Pair Corralation between Carlsberg A/S and Heineken Holding

Assuming the 90 days horizon Carlsberg AS is expected to generate 0.81 times more return on investment than Heineken Holding. However, Carlsberg AS is 1.24 times less risky than Heineken Holding. It trades about 0.25 of its potential returns per unit of risk. Heineken Holding NV is currently generating about 0.15 per unit of risk. If you would invest  9,049  in Carlsberg AS on December 22, 2024 and sell it today you would earn a total of  3,841  from holding Carlsberg AS or generate 42.45% return on investment over 90 days.

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

Carlsberg AS  vs.  Heineken Holding NV

Carlsberg A/S

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Carlsberg A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Heineken Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken Holding NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Heineken Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlsberg A/S and Heineken Holding

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

The idea behind Carlsberg AS and Heineken Holding 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.