Correlation Between Heineken Bhd and LPI Capital
Can any of the company-specific risk be diversified away by investing in both Heineken Bhd and LPI Capital 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 Bhd and LPI Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heineken Bhd and LPI Capital Bhd, you can compare the effects of market volatilities on Heineken Bhd and LPI Capital 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 Bhd with a short position of LPI Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Bhd and LPI Capital.
Diversification Opportunities for Heineken Bhd and LPI Capital
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heineken and LPI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Bhd and LPI Capital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPI Capital Bhd and Heineken Bhd 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 Bhd are associated (or correlated) with LPI Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPI Capital Bhd has no effect on the direction of Heineken Bhd i.e., Heineken Bhd and LPI Capital go up and down completely randomly.
Pair Corralation between Heineken Bhd and LPI Capital
Assuming the 90 days trading horizon Heineken Bhd is expected to generate 1.42 times more return on investment than LPI Capital. However, Heineken Bhd is 1.42 times more volatile than LPI Capital Bhd. It trades about 0.08 of its potential returns per unit of risk. LPI Capital Bhd is currently generating about -0.07 per unit of risk. If you would invest 2,255 in Heineken Bhd on September 25, 2024 and sell it today you would earn a total of 139.00 from holding Heineken Bhd or generate 6.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Heineken Bhd vs. LPI Capital Bhd
Performance |
Timeline |
Heineken Bhd |
LPI Capital Bhd |
Heineken Bhd and LPI Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Heineken Bhd and LPI Capital
The main advantage of trading using opposite Heineken Bhd and LPI Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heineken Bhd position performs unexpectedly, LPI Capital 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 LPI Capital will offset losses from the drop in LPI Capital's long position.Heineken Bhd vs. Carlsberg Brewery Malaysia | Heineken Bhd vs. Genetec Technology Bhd | Heineken Bhd vs. Sunway Construction Group | Heineken Bhd vs. Dagang Nexchange Bhd |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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