Correlation Between RCI Hospitality and Heineken Holding

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

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

Diversification Opportunities for RCI Hospitality and Heineken Holding

-0.77

Correlation Coefficient

RCI Hospitality  Heineken Holding

Pay attention - limited upside

The 3 months correlation between RCI and Heineken is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Heineken Holding go up and down completely randomly.

Pair Corralation between RCI Hospitality and Heineken Holding

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the Heineken Holding. But the stock apears to be less risky and, when comparing its historical volatility, RCI Hospitality Holdings is 1.09 times less risky than Heineken Holding. The stock trades about -0.22 of its potential returns per unit of risk. The Heineken Holding NV is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5,730  in Heineken Holding NV on December 21, 2024 and sell it today you would earn a total of  1,140  from holding Heineken Holding NV or generate 19.9% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  Heineken Holding NV

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCI Hospitality Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Heineken Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCI Hospitality and Heineken Holding

The main advantage of trading using opposite RCI Hospitality and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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 RCI Hospitality Holdings 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.