Correlation Between Heineken Holding and IMCD NV

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

Diversification Opportunities for Heineken Holding and IMCD NV

0.7

Correlation Coefficient

Heineken Holding  IMCD NV

Poor diversification

The 3 months correlation between Heineken and IMCD is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Heineken Holding NV and IMCD NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMCD NV 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 IMCD NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMCD NV has no effect on the direction of Heineken Holding i.e., Heineken Holding and IMCD NV go up and down completely randomly.

Pair Corralation between Heineken Holding and IMCD NV

Assuming the 90 days trading horizon Heineken Holding NV is expected to generate 0.58 times more return on investment than IMCD NV. However, Heineken Holding NV is 1.72 times less risky than IMCD NV. It trades about -0.01 of its potential returns per unit of risk. IMCD NV is currently generating about -0.03 per unit of risk. If you would invest  6,638  in Heineken Holding NV on April 20, 2025 and sell it today you would lose (63.00) from holding Heineken Holding NV or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Heineken Holding NV  vs.  IMCD NV

Heineken Holding

Risk-Adjusted Performance

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 comparatively stable basic indicators, Heineken Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

IMCD NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days IMCD NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IMCD NV is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Heineken Holding and IMCD NV

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

The idea behind Heineken Holding NV and IMCD 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.