Correlation Between Heineken and PLAY2CHILL

Can any of the company-specific risk be diversified away by investing in both Heineken and PLAY2CHILL 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 and PLAY2CHILL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Heineken NV and PLAY2CHILL SA ZY, you can compare the effects of market volatilities on Heineken and PLAY2CHILL 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 with a short position of PLAY2CHILL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and PLAY2CHILL.

Diversification Opportunities for Heineken and PLAY2CHILL

-0.67

Correlation Coefficient

Heineken  PLAY2CHILL

Excellent diversification

The 3 months correlation between Heineken and PLAY2CHILL is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and PLAY2CHILL SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAY2CHILL SA ZY and Heineken 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 NV are associated (or correlated) with PLAY2CHILL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAY2CHILL SA ZY has no effect on the direction of Heineken i.e., Heineken and PLAY2CHILL go up and down completely randomly.

Pair Corralation between Heineken and PLAY2CHILL

Assuming the 90 days trading horizon Heineken NV is expected to generate 0.78 times more return on investment than PLAY2CHILL. However, Heineken NV is 1.28 times less risky than PLAY2CHILL. It trades about 0.1 of its potential returns per unit of risk. PLAY2CHILL SA ZY is currently generating about -0.13 per unit of risk. If you would invest  6,820  in Heineken NV on December 22, 2024 and sell it today you would earn a total of  920.00  from holding Heineken NV or generate 13.49% return on investment over 90 days.

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

Heineken NV  vs.  PLAY2CHILL SA ZY

Heineken NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Heineken reported solid returns over the last few months and may actually be approaching a breakup point.

PLAY2CHILL SA ZY

Risk-Adjusted Performance

Very Weak

Over the last 90 days PLAY2CHILL SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Heineken and PLAY2CHILL

The main advantage of trading using opposite Heineken and PLAY2CHILL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, PLAY2CHILL 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 PLAY2CHILL will offset losses from the drop in PLAY2CHILL's long position.

The idea behind Heineken NV and PLAY2CHILL SA ZY 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.