Correlation Between Aalberts Industries and Heineken

Can any of the company-specific risk be diversified away by investing in both Aalberts Industries 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 Aalberts Industries and Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aalberts Industries NV and Heineken, you can compare the effects of market volatilities on Aalberts Industries 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 Aalberts Industries with a short position of Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aalberts Industries and Heineken.

Diversification Opportunities for Aalberts Industries and Heineken

-0.33

Correlation Coefficient

Aalberts Industries  Heineken

Very good diversification

The 3 months correlation between Aalberts and Heineken is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aalberts Industries NV and Heineken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken and Aalberts Industries 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 Aalberts Industries NV 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 has no effect on the direction of Aalberts Industries i.e., Aalberts Industries and Heineken go up and down completely randomly.

Pair Corralation between Aalberts Industries and Heineken

Assuming the 90 days trading horizon Aalberts Industries NV is expected to generate 2.1 times more return on investment than Heineken. However, Aalberts Industries is 2.1 times more volatile than Heineken. It trades about -0.01 of its potential returns per unit of risk. Heineken is currently generating about -0.14 per unit of risk. If you would invest  3,526  in Aalberts Industries NV on September 19, 2024 and sell it today you would lose (26.00) from holding Aalberts Industries NV or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aalberts Industries NV  vs.  Heineken

Aalberts Industries

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Aalberts Industries NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aalberts Industries is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Heineken

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aalberts Industries and Heineken

The main advantage of trading using opposite Aalberts Industries and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aalberts Industries 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.

The idea behind Aalberts Industries NV and Heineken pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.