Correlation Between Koninklijke Ahold and Anheuser Busch

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

By analyzing existing cross correlation between Koninklijke Ahold Delhaize and Anheuser Busch Inbev, you can compare the effects of market volatilities on Koninklijke Ahold and Anheuser Busch 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 Koninklijke Ahold with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Ahold and Anheuser Busch.

Diversification Opportunities for Koninklijke Ahold and Anheuser Busch

-0.8

Correlation Coefficient

Koninklijke Ahold  Anheuser Busch

Pay attention - limited upside

The 3 months correlation between Koninklijke and Anheuser is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and Koninklijke Ahold 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 Koninklijke Ahold Delhaize are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Koninklijke Ahold i.e., Koninklijke Ahold and Anheuser Busch go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Anheuser Busch

Assuming the 90 days horizon Koninklijke Ahold Delhaize is expected to generate 0.72 times more return on investment than Anheuser Busch. However, Koninklijke Ahold Delhaize is 1.39 times less risky than Anheuser Busch. It trades about 0.09 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.08 per unit of risk. If you would invest  3,106  in Koninklijke Ahold Delhaize on August 30, 2024 and sell it today you would earn a total of  179.00  from holding Koninklijke Ahold Delhaize or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Koninklijke Ahold Delhaize  vs.  Anheuser Busch Inbev

Koninklijke Ahold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Koninklijke Ahold is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Koninklijke Ahold and Anheuser Busch

The main advantage of trading using opposite Koninklijke Ahold and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Ahold position performs unexpectedly, Anheuser Busch 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 Anheuser Busch will offset losses from the drop in Anheuser Busch's long position.

The idea behind Koninklijke Ahold Delhaize and Anheuser Busch Inbev 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.