Correlation Between Suntory Beverage and Heineken
Can any of the company-specific risk be diversified away by investing in both Suntory Beverage 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 Suntory Beverage and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suntory Beverage Food and Heineken NV, you can compare the effects of market volatilities on Suntory Beverage 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 Suntory Beverage with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suntory Beverage and Heineken.
Diversification Opportunities for Suntory Beverage and Heineken
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Suntory and Heineken is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Suntory Beverage Food and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Suntory Beverage 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 Suntory Beverage Food 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 Suntory Beverage i.e., Suntory Beverage and Heineken go up and down completely randomly.
Pair Corralation between Suntory Beverage and Heineken
Assuming the 90 days horizon Suntory Beverage Food is expected to generate 1.12 times more return on investment than Heineken. However, Suntory Beverage is 1.12 times more volatile than Heineken NV. It trades about -0.1 of its potential returns per unit of risk. Heineken NV is currently generating about -0.63 per unit of risk. If you would invest 1,683 in Suntory Beverage Food on August 28, 2024 and sell it today you would lose (46.00) from holding Suntory Beverage Food or give up 2.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suntory Beverage Food vs. Heineken NV
Performance |
| Timeline |
| Suntory Beverage Food |
| Heineken NV |
Suntory Beverage and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suntory Beverage and Heineken
The main advantage of trading using opposite Suntory Beverage and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntory Beverage 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.| Suntory Beverage vs. Secom Co Ltd | Suntory Beverage vs. Mitsubishi Estate Co | Suntory Beverage vs. Shimano Inc ADR | Suntory Beverage vs. Sumitomo Chemical Co |
| Heineken vs. Anheuser Busch InBev SANV | Heineken vs. Tsingtao Brewery Co | Heineken vs. Carlsberg AS | Heineken vs. Heineken Holding NV |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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