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

0.92

Correlation Coefficient

Heineken Holding  Carlsberg

Almost no diversification

The 3 months correlation between Heineken and Carlsberg is 0.92. 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 generate 0.63 times more return on investment than Carlsberg. However, Heineken Holding NV is 1.6 times less risky than Carlsberg. It trades about -0.26 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.19 per unit of risk. If you would invest  6,025  in Heineken Holding NV on September 27, 2024 and sell it today you would lose (295.00) from holding Heineken Holding NV or give up 4.9% 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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.