Correlation Between Carlsberg and Danone SA
Can any of the company-specific risk be diversified away by investing in both Carlsberg and Danone SA 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 and Danone SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Danone SA, you can compare the effects of market volatilities on Carlsberg and Danone SA 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 with a short position of Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Danone SA.
Diversification Opportunities for Carlsberg and Danone SA
Poor diversification
The 3 months correlation between Carlsberg and Danone is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA and Carlsberg 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 AS are associated (or correlated) with Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Carlsberg i.e., Carlsberg and Danone SA go up and down completely randomly.
Pair Corralation between Carlsberg and Danone SA
Assuming the 90 days horizon Carlsberg AS is expected to under-perform the Danone SA. In addition to that, Carlsberg is 1.23 times more volatile than Danone SA. It trades about 0.0 of its total potential returns per unit of risk. Danone SA is currently generating about 0.04 per unit of volatility. If you would invest 4,863 in Danone SA on September 14, 2024 and sell it today you would earn a total of 1,880 from holding Danone SA or generate 38.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.09% |
| Values | Daily Returns |
Carlsberg AS vs. Danone SA
Performance |
| Timeline |
| Carlsberg AS |
| Danone SA |
Carlsberg and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and Danone SA
The main advantage of trading using opposite Carlsberg and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, Danone SA 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 Danone SA will offset losses from the drop in Danone SA's long position.| Carlsberg vs. Heineken NV | Carlsberg vs. Anheuser Busch Inbev | Carlsberg vs. Compania Cervecerias Unidas | Carlsberg vs. Boston Beer |
| Danone SA vs. BRF SA ADR | Danone SA vs. Pilgrims Pride Corp | Danone SA vs. John B Sanfilippo | Danone SA vs. Seneca Foods Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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