Correlation Between Koninklijke Philips and Heineken

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

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

Diversification Opportunities for Koninklijke Philips and Heineken

0.37

Correlation Coefficient

Koninklijke Philips  Heineken

Weak diversification

The 3 months correlation between Koninklijke and Heineken is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Philips NV and Heineken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken and Koninklijke Philips 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 Koninklijke Philips NV 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 Koninklijke Philips i.e., Koninklijke Philips and Heineken go up and down completely randomly.

Pair Corralation between Koninklijke Philips and Heineken

Assuming the 90 days trading horizon Koninklijke Philips NV is expected to generate 1.32 times more return on investment than Heineken. However, Koninklijke Philips is 1.32 times more volatile than Heineken. It trades about 0.03 of its potential returns per unit of risk. Heineken is currently generating about 0.01 per unit of risk. If you would invest  2,082  in Koninklijke Philips NV on April 24, 2025 and sell it today you would earn a total of  39.00  from holding Koninklijke Philips NV or generate 1.87% return on investment over 90 days.

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

Koninklijke Philips NV  vs.  Heineken

Koninklijke Philips

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Philips NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Koninklijke Philips is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Heineken

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heineken are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Heineken is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Koninklijke Philips and Heineken

The main advantage of trading using opposite Koninklijke Philips and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Philips 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 Koninklijke Philips NV 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.