Correlation Between Heineken and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Heineken and Compania Cervecerias 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 Heineken and Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken NV and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Heineken and Compania Cervecerias 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 Heineken with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Compania Cervecerias.
Diversification Opportunities for Heineken and Compania Cervecerias
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Heineken and Compania is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Heineken 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 Heineken NV are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Heineken i.e., Heineken and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Heineken and Compania Cervecerias
Assuming the 90 days horizon Heineken NV is expected to under-perform the Compania Cervecerias. In addition to that, Heineken is 1.42 times more volatile than Compania Cervecerias Unidas. It trades about 0.0 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.0 per unit of volatility. If you would invest 1,173 in Compania Cervecerias Unidas on August 24, 2024 and sell it today you would lose (66.00) from holding Compania Cervecerias Unidas or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.29% |
| Values | Daily Returns |
Heineken NV vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| Heineken NV |
| Compania Cervecerias |
Heineken and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Compania Cervecerias
The main advantage of trading using opposite Heineken and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Carlsberg AS | Heineken vs. Molson Coors Brewing | Heineken vs. Compania Cervecerias Unidas |
| Compania Cervecerias vs. Molson Coors Beverage | Compania Cervecerias vs. Fomento Economico Mexicano | Compania Cervecerias vs. Tsingtao Brewery Co | Compania Cervecerias vs. Carlsberg AS |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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