Correlation Between Tsingtao Brewery and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both Tsingtao Brewery and Heineken Holding 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 Tsingtao Brewery and Heineken Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsingtao Brewery Co and Heineken Holding NV, you can compare the effects of market volatilities on Tsingtao Brewery and Heineken Holding 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 Tsingtao Brewery with a short position of Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsingtao Brewery and Heineken Holding.
Diversification Opportunities for Tsingtao Brewery and Heineken Holding
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tsingtao and Heineken is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tsingtao Brewery Co and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Tsingtao Brewery 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 Tsingtao Brewery Co are associated (or correlated) with Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Tsingtao Brewery i.e., Tsingtao Brewery and Heineken Holding go up and down completely randomly.
Pair Corralation between Tsingtao Brewery and Heineken Holding
Assuming the 90 days horizon Tsingtao Brewery Co is expected to under-perform the Heineken Holding. In addition to that, Tsingtao Brewery is 1.05 times more volatile than Heineken Holding NV. It trades about -0.25 of its total potential returns per unit of risk. Heineken Holding NV is currently generating about 0.05 per unit of volatility. If you would invest 5,816 in Heineken Holding NV on October 24, 2024 and sell it today you would earn a total of 116.00 from holding Heineken Holding NV or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Tsingtao Brewery Co vs. Heineken Holding NV
Performance |
| Timeline |
| Tsingtao Brewery |
| Heineken Holding |
Tsingtao Brewery and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tsingtao Brewery and Heineken Holding
The main advantage of trading using opposite Tsingtao Brewery and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsingtao Brewery position performs unexpectedly, Heineken Holding 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 Holding will offset losses from the drop in Heineken Holding's long position.| Tsingtao Brewery vs. Jiangsu Expressway Co | Tsingtao Brewery vs. Tsingtao Brewery | Tsingtao Brewery vs. TravelSky Technology Ltd | Tsingtao Brewery vs. Air China Ltd |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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