Correlation Between Heineken and Takara Holdings
Can any of the company-specific risk be diversified away by investing in both Heineken and Takara 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 Takara 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 Takara Holdings, you can compare the effects of market volatilities on Heineken and Takara 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 Takara Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken and Takara Holdings.
Diversification Opportunities for Heineken and Takara Holdings
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heineken and Takara is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Heineken NV and Takara Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takara 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 Takara Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takara Holdings has no effect on the direction of Heineken i.e., Heineken and Takara Holdings go up and down completely randomly.
Pair Corralation between Heineken and Takara Holdings
Assuming the 90 days trading horizon Heineken NV is expected to under-perform the Takara Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Heineken NV is 1.83 times less risky than Takara Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Takara Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 710.00 in Takara Holdings on September 22, 2024 and sell it today you would earn a total of 60.00 from holding Takara Holdings or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heineken NV vs. Takara Holdings
Performance |
| Timeline |
| Heineken NV |
| Takara Holdings |
Heineken and Takara Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heineken and Takara Holdings
The main advantage of trading using opposite Heineken and Takara Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken position performs unexpectedly, Takara 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 Takara Holdings will offset losses from the drop in Takara Holdings' long position.| Heineken vs. FOMECONMEXSAB DCV UTS | Heineken vs. HEINEKEN SP ADR | Heineken vs. Ambev SA | Heineken vs. Heineken Holding NV |
| Takara Holdings vs. FOMECONMEXSAB DCV UTS | Takara Holdings vs. Heineken NV | Takara Holdings vs. HEINEKEN SP ADR | Takara Holdings vs. Ambev SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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