Correlation Between BP Plastics and Carlsberg Brewery
Can any of the company-specific risk be diversified away by investing in both BP Plastics 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 BP Plastics and Carlsberg Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BP Plastics Holding and Carlsberg Brewery Malaysia, you can compare the effects of market volatilities on BP Plastics 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 BP Plastics with a short position of Carlsberg Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Plastics and Carlsberg Brewery.
Diversification Opportunities for BP Plastics and Carlsberg Brewery
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between 5100 and Carlsberg is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BP Plastics Holding and Carlsberg Brewery Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg Brewery and BP Plastics 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 BP Plastics Holding 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 BP Plastics i.e., BP Plastics and Carlsberg Brewery go up and down completely randomly.
Pair Corralation between BP Plastics and Carlsberg Brewery
Assuming the 90 days trading horizon BP Plastics Holding is expected to under-perform the Carlsberg Brewery. In addition to that, BP Plastics is 1.63 times more volatile than Carlsberg Brewery Malaysia. It trades about -0.04 of its total potential returns per unit of risk. Carlsberg Brewery Malaysia is currently generating about 0.09 per unit of volatility. If you would invest 1,825 in Carlsberg Brewery Malaysia on October 26, 2024 and sell it today you would earn a total of 197.00 from holding Carlsberg Brewery Malaysia or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
BP Plastics Holding vs. Carlsberg Brewery Malaysia
Performance |
| Timeline |
| BP Plastics Holding |
| Carlsberg Brewery |
BP Plastics and Carlsberg Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BP Plastics and Carlsberg Brewery
The main advantage of trading using opposite BP Plastics and Carlsberg Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BP Plastics 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.| BP Plastics vs. Kossan Rubber Industries | BP Plastics vs. Sports Toto Berhad | BP Plastics vs. Leader Steel Holdings | BP Plastics vs. Choo Bee Metal |
| Carlsberg Brewery vs. SSF Home Group | Carlsberg Brewery vs. Choo Bee Metal | Carlsberg Brewery vs. Icon Offshore Bhd | Carlsberg Brewery vs. BP Plastics Holding |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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