Correlation Between Eq Energy and Heineken Holding

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

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

Diversification Opportunities for Eq Energy and Heineken Holding

0.47

Correlation Coefficient

Eq Energy  Heineken Holding

Very weak diversification

The 3 months correlation between EQLB and Heineken is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Eq Energy 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 Eq Energy Drink 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 Eq Energy i.e., Eq Energy and Heineken Holding go up and down completely randomly.

Pair Corralation between Eq Energy and Heineken Holding

Given the investment horizon of 90 days Eq Energy Drink is expected to generate 18.37 times more return on investment than Heineken Holding. However, Eq Energy is 18.37 times more volatile than Heineken Holding NV. It trades about 0.11 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.03 per unit of risk. If you would invest  0.09  in Eq Energy Drink on October 5, 2024 and sell it today you would earn a total of  0.01  from holding Eq Energy Drink or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Eq Energy Drink  vs.  Heineken Holding NV

Eq Energy Drink

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eq Energy Drink are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Eq Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Heineken Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eq Energy and Heineken Holding

The main advantage of trading using opposite Eq Energy and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eq Energy 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 Eq Energy Drink 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.