Correlation Between Heineken Holding and Carlsberg

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

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

Diversification Opportunities for Heineken Holding and Carlsberg

0.96

Correlation Coefficient

Heineken Holding  Carlsberg

Almost no diversification

The 3 months correlation between Heineken and Carlsberg is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Heineken Holding 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 Heineken Holding NV are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Heineken Holding i.e., Heineken Holding and Carlsberg go up and down completely randomly.

Pair Corralation between Heineken Holding and Carlsberg

Assuming the 90 days horizon Heineken Holding is expected to generate 1.49 times less return on investment than Carlsberg. In addition to that, Heineken Holding is 1.42 times more volatile than Carlsberg AS. It trades about 0.15 of its total potential returns per unit of risk. Carlsberg AS is currently generating about 0.32 per unit of volatility. If you would invest  1,865  in Carlsberg AS on December 30, 2024 and sell it today you would earn a total of  703.00  from holding Carlsberg AS or generate 37.69% return on investment over 90 days.

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

Heineken Holding NV  vs.  Carlsberg AS

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. In spite of fairly weak technical indicators, Heineken Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Carlsberg AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Carlsberg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heineken Holding and Carlsberg

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

The idea behind Heineken Holding NV and Carlsberg AS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.