Correlation Between Carlsberg and Heineken
Can any of the company-specific risk be diversified away by investing in both Carlsberg 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 Carlsberg and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Heineken NV, you can compare the effects of market volatilities on Carlsberg 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 Carlsberg with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Heineken.
Diversification Opportunities for Carlsberg and Heineken
Very poor diversification
The 3 months correlation between Carlsberg and Heineken is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Carlsberg 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 Carlsberg AS 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 Carlsberg i.e., Carlsberg and Heineken go up and down completely randomly.
Pair Corralation between Carlsberg and Heineken
Assuming the 90 days trading horizon Carlsberg AS is expected to generate 1.37 times more return on investment than Heineken. However, Carlsberg is 1.37 times more volatile than Heineken NV. It trades about -0.22 of its potential returns per unit of risk. Heineken NV is currently generating about -0.56 per unit of risk. If you would invest 10,500 in Carlsberg AS on August 25, 2024 and sell it today you would lose (794.00) from holding Carlsberg AS or give up 7.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlsberg AS vs. Heineken NV
Performance |
| Timeline |
| Carlsberg AS |
| Heineken NV |
Carlsberg and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and Heineken
The main advantage of trading using opposite Carlsberg and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg 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.| Carlsberg vs. Penn National Gaming | Carlsberg vs. CI GAMES SA | Carlsberg vs. MOVIE GAMES SA | Carlsberg vs. ANGLER GAMING PLC |
| Heineken vs. Plastic Omnium | Heineken vs. Diamondrock Hospitality Co | Heineken vs. HEALTHCARE REAL A | Heineken vs. Cardinal Health |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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