Correlation Between Comba Telecom and Heineken Holding

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

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

Diversification Opportunities for Comba Telecom and Heineken Holding

0.68

Correlation Coefficient

Comba Telecom  Heineken Holding

Poor diversification

The 3 months correlation between Comba and Heineken is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Comba Telecom Systems and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Comba Telecom 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 Comba Telecom Systems 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 Comba Telecom i.e., Comba Telecom and Heineken Holding go up and down completely randomly.

Pair Corralation between Comba Telecom and Heineken Holding

Assuming the 90 days trading horizon Comba Telecom Systems is expected to generate 2.18 times more return on investment than Heineken Holding. However, Comba Telecom is 2.18 times more volatile than Heineken Holding NV. It trades about 0.15 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  14.00  in Comba Telecom Systems on December 24, 2024 and sell it today you would earn a total of  6.00  from holding Comba Telecom Systems or generate 42.86% return on investment over 90 days.

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

Comba Telecom Systems  vs.  Heineken Holding NV

Comba Telecom Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Comba Telecom Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Comba Telecom unveiled 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 fragile basic indicators, Heineken Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comba Telecom and Heineken Holding

The main advantage of trading using opposite Comba Telecom and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comba Telecom 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 Comba Telecom Systems 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.