Correlation Between Value8 NV and Heineken Holding

Can any of the company-specific risk be diversified away by investing in both Value8 NV and Heineken Holding 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 Value8 NV and Heineken Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Value8 NV and Heineken Holding NV, you can compare the effects of market volatilities on Value8 NV and Heineken Holding 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 Value8 NV with a short position of Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value8 NV and Heineken Holding.

Diversification Opportunities for Value8 NV and Heineken Holding

-0.59

Correlation Coefficient

Value8 NV  Heineken Holding

Excellent diversification

The 3 months correlation between Value8 and Heineken is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Value8 NV and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding and Value8 NV 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 Value8 NV are associated (or correlated) with Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of Value8 NV i.e., Value8 NV and Heineken Holding go up and down completely randomly.

Pair Corralation between Value8 NV and Heineken Holding

Assuming the 90 days trading horizon Value8 NV is expected to generate 1.45 times more return on investment than Heineken Holding. However, Value8 NV is 1.45 times more volatile than Heineken Holding NV. It trades about 0.05 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.21 per unit of risk. If you would invest  546.00  in Value8 NV on September 18, 2024 and sell it today you would earn a total of  24.00  from holding Value8 NV or generate 4.4% return on investment over 90 days.

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

Value8 NV  vs.  Heineken Holding NV

Value8 NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Value8 NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Value8 NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Value8 NV and Heineken Holding

The main advantage of trading using opposite Value8 NV and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value8 NV position performs unexpectedly, Heineken Holding 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 Holding will offset losses from the drop in Heineken Holding's long position.

The idea behind Value8 NV and Heineken Holding 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.