Correlation Between Alliance Financial and Carlsberg Brewery
Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Carlsberg Brewery 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 Alliance Financial and Carlsberg Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Financial Group and Carlsberg Brewery Malaysia, you can compare the effects of market volatilities on Alliance Financial and Carlsberg Brewery 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 Alliance Financial with a short position of Carlsberg Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Carlsberg Brewery.
Diversification Opportunities for Alliance Financial and Carlsberg Brewery
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alliance and Carlsberg is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Carlsberg Brewery Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg Brewery and Alliance Financial 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 Alliance Financial Group are associated (or correlated) with Carlsberg Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg Brewery has no effect on the direction of Alliance Financial i.e., Alliance Financial and Carlsberg Brewery go up and down completely randomly.
Pair Corralation between Alliance Financial and Carlsberg Brewery
Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 1.31 times more return on investment than Carlsberg Brewery. However, Alliance Financial is 1.31 times more volatile than Carlsberg Brewery Malaysia. It trades about 0.14 of its potential returns per unit of risk. Carlsberg Brewery Malaysia is currently generating about 0.07 per unit of risk. If you would invest 328.00 in Alliance Financial Group on September 4, 2024 and sell it today you would earn a total of 155.00 from holding Alliance Financial Group or generate 47.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Alliance Financial Group vs. Carlsberg Brewery Malaysia
Performance |
Timeline |
Alliance Financial |
Carlsberg Brewery |
Alliance Financial and Carlsberg Brewery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alliance Financial and Carlsberg Brewery
The main advantage of trading using opposite Alliance Financial and Carlsberg Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Carlsberg Brewery 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 Brewery will offset losses from the drop in Carlsberg Brewery's long position.Alliance Financial vs. Aeon Credit Service | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. Swift Haulage Bhd | Alliance Financial vs. Insas Bhd |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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