Correlation Between Teleperformance and Heineken Holding

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

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

Diversification Opportunities for Teleperformance and Heineken Holding

0.86

Correlation Coefficient

Teleperformance  Heineken Holding

Very poor diversification

The 3 months correlation between Teleperformance and Heineken is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance SE and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Teleperformance 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 Teleperformance SE 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 Teleperformance i.e., Teleperformance and Heineken Holding go up and down completely randomly.

Pair Corralation between Teleperformance and Heineken Holding

Assuming the 90 days horizon Teleperformance SE is expected to under-perform the Heineken Holding. In addition to that, Teleperformance is 1.64 times more volatile than Heineken Holding NV. It trades about -0.05 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	Strong
Accuracy	99.29%
Values	Daily Returns

Teleperformance SE  vs.  Heineken Holding NV

Teleperformance SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleperformance SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains 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 Teleperformance and Heineken Holding

The main advantage of trading using opposite Teleperformance and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleperformance 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 Teleperformance SE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.