Correlation Between Heineken Holding and Carlsberg

Can any of the company-specific risk be diversified away by investing in both Heineken Holding and Carlsberg 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 Carlsberg 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 Carlsberg AS, you can compare the effects of market volatilities on Heineken Holding and Carlsberg 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 Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heineken Holding and Carlsberg.

Diversification Opportunities for Heineken Holding and Carlsberg

0.94

Correlation Coefficient

Heineken Holding  Carlsberg

Almost no diversification

The 3 months correlation between Heineken and Carlsberg is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS 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 Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Heineken Holding i.e., Heineken Holding and Carlsberg go up and down completely randomly.

Pair Corralation between Heineken Holding and Carlsberg

Assuming the 90 days horizon Heineken Holding NV is expected to under-perform the Carlsberg. But the otc stock apears to be less risky and, when comparing its historical volatility, Heineken Holding NV is 1.3 times less risky than Carlsberg. The otc stock trades about -0.39 of its potential returns per unit of risk. The Carlsberg AS is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  2,264  in Carlsberg AS on August 30, 2024 and sell it today you would lose (183.00) from holding Carlsberg AS or give up 8.08% of portfolio value over 90 days.

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

Heineken Holding NV  vs.  Carlsberg AS

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 inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Carlsberg AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Heineken Holding and Carlsberg

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

The idea behind Heineken Holding NV and Carlsberg AS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.