Correlation Between Carsales and Heineken
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carsales and Heineken NV, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and Heineken.
Diversification Opportunities for Carsales and Heineken
Pay attention - limited upside
The 3 months correlation between Carsales and Heineken is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Carsales and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Carsales 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 Carsales 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 Carsales i.e., Carsales and Heineken go up and down completely randomly.
Pair Corralation between Carsales and Heineken
Assuming the 90 days trading horizon Carsales is expected to generate 1.3 times more return on investment than Heineken. However, Carsales is 1.3 times more volatile than Heineken NV. It trades about 0.09 of its potential returns per unit of risk. Heineken NV is currently generating about -0.12 per unit of risk. If you would invest 2,064 in Carsales on September 3, 2024 and sell it today you would earn a total of 476.00 from holding Carsales or generate 23.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carsales vs. Heineken NV
Performance |
| Timeline |
| Carsales |
| Heineken NV |
Carsales and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and Heineken
The main advantage of trading using opposite Carsales and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. Thai Beverage Public | Carsales vs. Premier Foods PLC | Carsales vs. Food Life Companies | Carsales vs. CN MODERN DAIRY |
| Heineken vs. Heineken Holding NV | Heineken vs. Tsingtao Brewery | Heineken vs. Asahi Group Holdings | Heineken vs. Kirin Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |