Correlation Between Heineken Holding and Exor NV

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

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

Diversification Opportunities for Heineken Holding and Exor NV

0.85

Correlation Coefficient

Heineken Holding  Exor NV

Very poor diversification

The 3 months correlation between Heineken and Exor is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Exor NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exor NV and Heineken Holding 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 Holding NV are associated (or correlated) with Exor NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exor NV has no effect on the direction of Heineken Holding i.e., Heineken Holding and Exor NV go up and down completely randomly.

Pair Corralation between Heineken Holding and Exor NV

Assuming the 90 days trading horizon Heineken Holding NV is expected to under-perform the Exor NV. But the stock apears to be less risky and, when comparing its historical volatility, Heineken Holding NV is 1.27 times less risky than Exor NV. The stock trades about -0.21 of its potential returns per unit of risk. The Exor NV is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  9,785  in Exor NV on September 18, 2024 and sell it today you would lose (860.00) from holding Exor NV or give up 8.79% of portfolio value over 90 days.

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

Heineken Holding NV  vs.  Exor NV

Heineken Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken Holding NV 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.

Exor NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exor NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Heineken Holding and Exor NV

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

The idea behind Heineken Holding NV and Exor 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.