Correlation Between Carlsberg and Alefarm Brewing
Can any of the company-specific risk be diversified away by investing in both Carlsberg and Alefarm Brewing 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 Alefarm Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Alefarm Brewing AS, you can compare the effects of market volatilities on Carlsberg and Alefarm Brewing 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 Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Alefarm Brewing.
Diversification Opportunities for Carlsberg and Alefarm Brewing
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlsberg and Alefarm is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Alefarm Brewing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alefarm Brewing AS 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 Alefarm Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alefarm Brewing AS has no effect on the direction of Carlsberg i.e., Carlsberg and Alefarm Brewing go up and down completely randomly.
Pair Corralation between Carlsberg and Alefarm Brewing
Assuming the 90 days trading horizon Carlsberg is expected to generate 1.08 times less return on investment than Alefarm Brewing. But when comparing it to its historical volatility, Carlsberg AS is 2.53 times less risky than Alefarm Brewing. It trades about 0.19 of its potential returns per unit of risk. Alefarm Brewing AS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 131.00 in Alefarm Brewing AS on November 4, 2024 and sell it today you would earn a total of 7.00 from holding Alefarm Brewing AS or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlsberg AS vs. Alefarm Brewing AS
Performance |
| Timeline |
| Carlsberg AS |
| Alefarm Brewing AS |
Carlsberg and Alefarm Brewing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and Alefarm Brewing
The main advantage of trading using opposite Carlsberg and Alefarm Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, Alefarm Brewing 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 Alefarm Brewing will offset losses from the drop in Alefarm Brewing's long position.| Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg AS |
| Alefarm Brewing vs. Nordea Bank Abp | Alefarm Brewing vs. Strategic Investments AS | Alefarm Brewing vs. Kreditbanken AS | Alefarm Brewing vs. Skjern Bank 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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