Correlation Between Carlsberg Brewery and Lotus KFM
Can any of the company-specific risk be diversified away by investing in both Carlsberg Brewery and Lotus KFM 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 Carlsberg Brewery and Lotus KFM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg Brewery Malaysia and Lotus KFM Bhd, you can compare the effects of market volatilities on Carlsberg Brewery and Lotus KFM 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 Carlsberg Brewery with a short position of Lotus KFM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg Brewery and Lotus KFM.
Diversification Opportunities for Carlsberg Brewery and Lotus KFM
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlsberg and Lotus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and Lotus KFM Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus KFM Bhd and Carlsberg Brewery 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 Carlsberg Brewery Malaysia are associated (or correlated) with Lotus KFM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus KFM Bhd has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and Lotus KFM go up and down completely randomly.
Pair Corralation between Carlsberg Brewery and Lotus KFM
Assuming the 90 days trading horizon Carlsberg Brewery Malaysia is expected to generate 0.22 times more return on investment than Lotus KFM. However, Carlsberg Brewery Malaysia is 4.63 times less risky than Lotus KFM. It trades about -0.39 of its potential returns per unit of risk. Lotus KFM Bhd is currently generating about -0.11 per unit of risk. If you would invest 2,008 in Carlsberg Brewery Malaysia on November 28, 2024 and sell it today you would lose (100.00) from holding Carlsberg Brewery Malaysia or give up 4.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlsberg Brewery Malaysia vs. Lotus KFM Bhd
Performance |
| Timeline |
| Carlsberg Brewery |
| Lotus KFM Bhd |
Carlsberg Brewery and Lotus KFM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg Brewery and Lotus KFM
The main advantage of trading using opposite Carlsberg Brewery and Lotus KFM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg Brewery position performs unexpectedly, Lotus KFM 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 Lotus KFM will offset losses from the drop in Lotus KFM's long position.| Carlsberg Brewery vs. Eonmetall Group Bhd | Carlsberg Brewery vs. TAS Offshore Bhd | Carlsberg Brewery vs. Press Metal Bhd | Carlsberg Brewery vs. YX Precious Metals |
| Lotus KFM vs. Kluang Rubber | Lotus KFM vs. Press Metal Bhd | Lotus KFM vs. Petronas Chemicals Group | Lotus KFM vs. Choo Bee Metal |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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