Correlation Between THRACE PLASTICS and HEINEKEN

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

By analyzing existing cross correlation between THRACE PLASTICS and HEINEKEN SP ADR, you can compare the effects of market volatilities on THRACE PLASTICS 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 THRACE PLASTICS with a short position of HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of THRACE PLASTICS and HEINEKEN.

Diversification Opportunities for THRACE PLASTICS and HEINEKEN

-0.61

Correlation Coefficient

THRACE PLASTICS  HEINEKEN

Excellent diversification

The 3 months correlation between THRACE and HEINEKEN is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding THRACE PLASTICS and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR and THRACE PLASTICS 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 THRACE PLASTICS 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 SP ADR has no effect on the direction of THRACE PLASTICS i.e., THRACE PLASTICS and HEINEKEN go up and down completely randomly.

Pair Corralation between THRACE PLASTICS and HEINEKEN

Assuming the 90 days trading horizon THRACE PLASTICS is expected to generate 1.23 times more return on investment than HEINEKEN. However, THRACE PLASTICS is 1.23 times more volatile than HEINEKEN SP ADR. It trades about 0.21 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.22 per unit of risk. If you would invest  393.00  in THRACE PLASTICS on October 25, 2024 and sell it today you would earn a total of  22.00  from holding THRACE PLASTICS or generate 5.6% return on investment over 90 days.

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

THRACE PLASTICS  vs.  HEINEKEN SP ADR

THRACE PLASTICS

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in THRACE PLASTICS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, THRACE PLASTICS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

HEINEKEN SP ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEINEKEN SP ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals 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 THRACE PLASTICS and HEINEKEN

The main advantage of trading using opposite THRACE PLASTICS and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THRACE PLASTICS 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 THRACE PLASTICS and HEINEKEN SP ADR 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.