Correlation Between Heineken and Aalberts Industries

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

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

Diversification Opportunities for Heineken and Aalberts Industries

-0.33

Correlation Coefficient

Heineken  Aalberts Industries

Very good diversification

The 3 months correlation between Heineken and Aalberts is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Heineken and Aalberts Industries NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalberts Industries and Heineken 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 are associated (or correlated) with Aalberts Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalberts Industries has no effect on the direction of Heineken i.e., Heineken and Aalberts Industries go up and down completely randomly.

Pair Corralation between Heineken and Aalberts Industries

Assuming the 90 days trading horizon Heineken is expected to under-perform the Aalberts Industries. But the stock apears to be less risky and, when comparing its historical volatility, Heineken is 2.1 times less risky than Aalberts Industries. The stock trades about -0.14 of its potential returns per unit of risk. The Aalberts Industries NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,526  in Aalberts Industries NV on September 18, 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

Heineken  vs.  Aalberts Industries NV

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.

Aalberts Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aalberts Industries NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Heineken and Aalberts Industries

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

The idea behind Heineken and Aalberts Industries NV 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.