Correlation Between Ambev SA and Heineken
Can any of the company-specific risk be diversified away by investing in both Ambev SA 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 Ambev SA and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambev SA ADR and Heineken NV, you can compare the effects of market volatilities on Ambev SA 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 Ambev SA with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambev SA and Heineken.
Diversification Opportunities for Ambev SA and Heineken
Poor diversification
The 3 months correlation between Ambev and Heineken is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA ADR and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Ambev SA 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 Ambev SA ADR 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 Ambev SA i.e., Ambev SA and Heineken go up and down completely randomly.
Pair Corralation between Ambev SA and Heineken
Given the investment horizon of 90 days Ambev SA ADR is expected to under-perform the Heineken. But the stock apears to be less risky and, when comparing its historical volatility, Ambev SA ADR is 1.57 times less risky than Heineken. The stock trades about -0.02 of its potential returns per unit of risk. The Heineken NV is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 9,041 in Heineken NV on August 24, 2024 and sell it today you would lose (1,421) from holding Heineken NV or give up 15.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.29% |
| Values | Daily Returns |
Ambev SA ADR vs. Heineken NV
Performance |
| Timeline |
| Ambev SA ADR |
| Heineken NV |
Ambev SA and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambev SA and Heineken
The main advantage of trading using opposite Ambev SA and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA 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.| Ambev SA vs. Molson Coors Beverage | Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Tsingtao Brewery Co | Ambev SA vs. Carlsberg AS |
| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Carlsberg AS | Heineken vs. Molson Coors Brewing | Heineken vs. Compania Cervecerias Unidas |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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