Correlation Between Pernod Ricard and Heineken Holding

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

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

Diversification Opportunities for Pernod Ricard and Heineken Holding

0.55

Correlation Coefficient

Pernod Ricard  Heineken Holding

Very weak diversification

The 3 months correlation between Pernod and Heineken is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Pernod Ricard 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 Pernod Ricard SA 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 Pernod Ricard i.e., Pernod Ricard and Heineken Holding go up and down completely randomly.

Pair Corralation between Pernod Ricard and Heineken Holding

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Heineken Holding. In addition to that, Pernod Ricard is 1.19 times more volatile than Heineken Holding NV. It trades about -0.03 of its total potential returns per unit of risk. Heineken Holding NV is currently generating about -0.01 per unit of volatility. If you would invest  7,577  in Heineken Holding NV on October 11, 2024 and sell it today you would lose (1,582) from holding Heineken Holding NV or give up 20.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.91%
Values	Daily Returns

Pernod Ricard SA  vs.  Heineken Holding NV

Pernod Ricard SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pernod Ricard SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators 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.

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. Despite weak performance in the last few months, the Stock's technical indicators 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.

Pair Trading with Pernod Ricard and Heineken Holding

The main advantage of trading using opposite Pernod Ricard and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard 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 Pernod Ricard SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.