Correlation Between Hiru and Heineken

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

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

Diversification Opportunities for Hiru and Heineken

0.85

Correlation Coefficient

Hiru  Heineken

Very poor diversification

The 3 months correlation between Hiru and Heineken is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hiru Corp. and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV and Hiru 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 Hiru Corporation 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 NV has no effect on the direction of Hiru i.e., Hiru and Heineken go up and down completely randomly.

Pair Corralation between Hiru and Heineken

Given the investment horizon of 90 days Hiru Corporation is expected to under-perform the Heineken. In addition to that, Hiru is 9.02 times more volatile than Heineken NV. It trades about -0.04 of its total potential returns per unit of risk. Heineken NV is currently generating about -0.25 per unit of volatility. If you would invest  4,347  in Heineken NV on September 21, 2024 and sell it today you would lose (767.00) from holding Heineken NV or give up 17.64% of portfolio value over 90 days.

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

Hiru Corp.  vs.  Heineken NV

Hiru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiru Corporation 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.

Heineken NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heineken NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hiru and Heineken

The main advantage of trading using opposite Hiru and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hiru 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 Hiru Corporation and Heineken 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.