Correlation Between Heineken and Akzo Nobel

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

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

Diversification Opportunities for Heineken and Akzo Nobel

0.58

Correlation Coefficient

Heineken  Akzo Nobel

Very weak diversification

The 3 months correlation between Heineken and Akzo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Heineken and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV 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 Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of Heineken i.e., Heineken and Akzo Nobel go up and down completely randomly.

Pair Corralation between Heineken and Akzo Nobel

Assuming the 90 days trading horizon Heineken is expected to under-perform the Akzo Nobel. But the stock apears to be less risky and, when comparing its historical volatility, Heineken is 1.5 times less risky than Akzo Nobel. The stock trades about -0.2 of its potential returns per unit of risk. The Akzo Nobel NV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,807  in Akzo Nobel NV on September 18, 2024 and sell it today you would lose (119.00) from holding Akzo Nobel NV or give up 2.05% of portfolio value over 90 days.

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

Heineken  vs.  Akzo Nobel 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.

Akzo Nobel NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Heineken and Akzo Nobel

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

The idea behind Heineken and Akzo Nobel 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.