Correlation Between Molson Coors and Asahi Group

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

By analyzing existing cross correlation between Molson Coors Brewing and Asahi Group Holdings, you can compare the effects of market volatilities on Molson Coors and Asahi Group 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 Molson Coors with a short position of Asahi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Molson Coors and Asahi Group.

Diversification Opportunities for Molson Coors and Asahi Group

-0.45

Correlation Coefficient

Molson Coors  Asahi Group

Very good diversification

The 3 months correlation between Molson and Asahi is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Molson Coors Brewing and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings and Molson Coors 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 Molson Coors Brewing are associated (or correlated) with Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Molson Coors i.e., Molson Coors and Asahi Group go up and down completely randomly.

Pair Corralation between Molson Coors and Asahi Group

Considering the 90-day investment horizon Molson Coors is expected to generate 20.05 times less return on investment than Asahi Group. But when comparing it to its historical volatility, Molson Coors Brewing is 28.26 times less risky than Asahi Group. It trades about 0.11 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,610  in Asahi Group Holdings on September 3, 2024 and sell it today you would lose (2,610) from holding Asahi Group Holdings or give up 72.3% of portfolio value over 90 days.

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

Molson Coors Brewing  vs.  Asahi Group Holdings

Molson Coors Brewing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asahi Group Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asahi Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Asahi Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Molson Coors and Asahi Group

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

The idea behind Molson Coors Brewing and Asahi Group Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..