Correlation Between Lenox Pasifik and HEINEKEN

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

By analyzing existing cross correlation between Lenox Pasifik Investama and HEINEKEN SP ADR, you can compare the effects of market volatilities on Lenox Pasifik and HEINEKEN 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 Lenox Pasifik with a short position of HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenox Pasifik and HEINEKEN.

Diversification Opportunities for Lenox Pasifik and HEINEKEN

-0.39

Correlation Coefficient

Lenox Pasifik  HEINEKEN

Very good diversification

The 3 months correlation between Lenox and HEINEKEN is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lenox Pasifik Investama and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR and Lenox Pasifik 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 Lenox Pasifik Investama are associated (or correlated) with HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of Lenox Pasifik i.e., Lenox Pasifik and HEINEKEN go up and down completely randomly.

Pair Corralation between Lenox Pasifik and HEINEKEN

Assuming the 90 days trading horizon Lenox Pasifik Investama is expected to generate 10.24 times more return on investment than HEINEKEN. However, Lenox Pasifik is 10.24 times more volatile than HEINEKEN SP ADR. It trades about 0.08 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.21 per unit of risk. If you would invest  0.25  in Lenox Pasifik Investama on September 3, 2024 and sell it today you would earn a total of  0.05  from holding Lenox Pasifik Investama or generate 20.0% return on investment over 90 days.

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

Lenox Pasifik Investama  vs.  HEINEKEN SP ADR

Lenox Pasifik Investama

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lenox Pasifik Investama are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lenox Pasifik reported solid returns over the last few months and may actually be approaching a breakup point.

HEINEKEN SP ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lenox Pasifik and HEINEKEN

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

The idea behind Lenox Pasifik Investama and HEINEKEN SP ADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.