Correlation Between Heineken and Kirin Holdings
Can any of the company-specific risk be diversified away by investing in both Heineken and Kirin Holdings 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 Kirin Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken NV and Kirin Holdings, you can compare the effects of market volatilities on Heineken and Kirin Holdings 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 Kirin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Kirin Holdings.
Diversification Opportunities for Heineken and Kirin Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heineken and Kirin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and Kirin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirin Holdings 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 Kirin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirin Holdings has no effect on the direction of Heineken i.e., Heineken and Kirin Holdings go up and down completely randomly.
Pair Corralation between Heineken and Kirin Holdings
Assuming the 90 days trading horizon Heineken NV is expected to under-perform the Kirin Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Heineken NV is 1.53 times less risky than Kirin Holdings. The stock trades about -0.33 of its potential returns per unit of risk. The Kirin Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Kirin Holdings on September 1, 2024 and sell it today you would lose (50.00) from holding Kirin Holdings or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Heineken NV vs. Kirin Holdings
Performance |
| Timeline |
| Heineken NV |
| Kirin Holdings |
Heineken and Kirin Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Kirin Holdings
The main advantage of trading using opposite Heineken and Kirin Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, Kirin Holdings 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 Kirin Holdings will offset losses from the drop in Kirin Holdings' long position.| Heineken vs. Lamar Advertising | Heineken vs. FORWARD AIR P | Heineken vs. Carsales | Heineken vs. YATRA ONLINE DL 0001 |
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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 Stocks Directory module to find actively traded stocks across global markets.
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