Correlation Between Suntory Beverage and Heineken

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

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

Diversification Opportunities for Suntory Beverage and Heineken

0.66

Correlation Coefficient

Suntory Beverage  Heineken

Poor diversification

The 3 months correlation between Suntory and Heineken is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Suntory Beverage 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 Suntory Beverage Food 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 NV has no effect on the direction of Suntory Beverage i.e., Suntory Beverage and Heineken go up and down completely randomly.

Pair Corralation between Suntory Beverage and Heineken

Assuming the 90 days horizon Suntory Beverage Food is expected to under-perform the Heineken. But the pink sheet apears to be less risky and, when comparing its historical volatility, Suntory Beverage Food is 1.55 times less risky than Heineken. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Heineken NV is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  8,140  in Heineken NV on October 10, 2024 and sell it today you would lose (988.00) from holding Heineken NV or give up 12.14% of portfolio value over 90 days.

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

Suntory Beverage Food  vs.  Heineken NV

Suntory Beverage Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntory Beverage Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Suntory Beverage and Heineken

The main advantage of trading using opposite Suntory Beverage and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage 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 Suntory Beverage Food and Heineken 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.