Correlation Between Alm Brand and Carlsberg
Can any of the company-specific risk be diversified away by investing in both Alm Brand and Carlsberg 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 Alm Brand and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alm Brand and Carlsberg AS, you can compare the effects of market volatilities on Alm Brand and Carlsberg 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 Alm Brand with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alm Brand and Carlsberg.
Diversification Opportunities for Alm Brand and Carlsberg
Excellent diversification
The 3 months correlation between Alm and Carlsberg is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alm Brand and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Alm Brand 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 Alm Brand are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Alm Brand i.e., Alm Brand and Carlsberg go up and down completely randomly.
Pair Corralation between Alm Brand and Carlsberg
Assuming the 90 days trading horizon Alm Brand is expected to generate 0.73 times more return on investment than Carlsberg. However, Alm Brand is 1.36 times less risky than Carlsberg. It trades about 0.15 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.08 per unit of risk. If you would invest 1,322 in Alm Brand on October 20, 2024 and sell it today you would earn a total of 94.00 from holding Alm Brand or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alm Brand vs. Carlsberg AS
Performance |
| Timeline |
| Alm Brand |
| Carlsberg AS |
Alm Brand and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alm Brand and Carlsberg
The main advantage of trading using opposite Alm Brand and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alm Brand position performs unexpectedly, Carlsberg 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 will offset losses from the drop in Carlsberg's long position.The idea behind Alm Brand and Carlsberg AS 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.| Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg AS |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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