Correlation Between Alumina Limited and Heineken
Can any of the company-specific risk be diversified away by investing in both Alumina Limited 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 Alumina Limited and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumina Limited PK and Heineken NV, you can compare the effects of market volatilities on Alumina Limited 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 Alumina Limited with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumina Limited and Heineken.
Diversification Opportunities for Alumina Limited and Heineken
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alumina and Heineken is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited PK and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Alumina Limited 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 Alumina Limited PK 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 Alumina Limited i.e., Alumina Limited and Heineken go up and down completely randomly.
Pair Corralation between Alumina Limited and Heineken
Assuming the 90 days horizon Alumina Limited PK is expected to generate 1.73 times more return on investment than Heineken. However, Alumina Limited is 1.73 times more volatile than Heineken NV. It trades about 0.13 of its potential returns per unit of risk. Heineken NV is currently generating about -0.03 per unit of risk. If you would invest 194.00 in Alumina Limited PK on August 24, 2024 and sell it today you would earn a total of 175.00 from holding Alumina Limited PK or generate 90.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 78.44% |
| Values | Daily Returns |
Alumina Limited PK vs. Heineken NV
Performance |
| Timeline |
| Alumina Limited PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Heineken NV |
Alumina Limited and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumina Limited and Heineken
The main advantage of trading using opposite Alumina Limited and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumina Limited 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.| Alumina Limited vs. Anhui Conch Cement | Alumina Limited vs. Asahi Kaisei Corp | Alumina Limited vs. Covestro ADR |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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