Correlation Between AMS Small and Heineken

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

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

Diversification Opportunities for AMS Small and Heineken

-0.15

Correlation Coefficient

AMS Small  Heineken

Good diversification

The 3 months correlation between AMS and Heineken is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and Heineken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken and AMS Small 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 AMS Small Cap 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 has no effect on the direction of AMS Small i.e., AMS Small and Heineken go up and down completely randomly.

Pair Corralation between AMS Small and Heineken

Assuming the 90 days trading horizon AMS Small Cap is expected to generate 0.72 times more return on investment than Heineken. However, AMS Small Cap is 1.39 times less risky than Heineken. It trades about 0.18 of its potential returns per unit of risk. Heineken is currently generating about 0.0 per unit of risk. If you would invest  138,076  in AMS Small Cap on April 22, 2025 and sell it today you would earn a total of  14,147  from holding AMS Small Cap or generate 10.25% return on investment over 90 days.

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

AMS Small Cap  vs.  Heineken

Pair Trading with AMS Small and Heineken

The main advantage of trading using opposite AMS Small and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small 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 AMS Small Cap and Heineken 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.