Correlation Between Heineken and COMPUTERSHARE

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

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

Diversification Opportunities for Heineken and COMPUTERSHARE

-0.55

Correlation Coefficient

Heineken  COMPUTERSHARE

Excellent diversification

The 3 months correlation between Heineken and COMPUTERSHARE is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and COMPUTERSHARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTERSHARE 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 COMPUTERSHARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTERSHARE has no effect on the direction of Heineken i.e., Heineken and COMPUTERSHARE go up and down completely randomly.

Pair Corralation between Heineken and COMPUTERSHARE

Assuming the 90 days trading horizon Heineken NV is expected to under-perform the COMPUTERSHARE. But the stock apears to be less risky and, when comparing its historical volatility, Heineken NV is 1.32 times less risky than COMPUTERSHARE. The stock trades about -0.16 of its potential returns per unit of risk. The COMPUTERSHARE is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,610  in COMPUTERSHARE on October 10, 2024 and sell it today you would earn a total of  490.00  from holding COMPUTERSHARE or generate 30.43% return on investment over 90 days.

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

Heineken NV  vs.  COMPUTERSHARE

Heineken NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COMPUTERSHARE

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, COMPUTERSHARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heineken and COMPUTERSHARE

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

The idea behind Heineken NV and COMPUTERSHARE 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.