Correlation Between Carlsberg and First Farms
Can any of the company-specific risk be diversified away by investing in both Carlsberg and First Farms 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 First Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and First Farms AS, you can compare the effects of market volatilities on Carlsberg and First Farms 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 First Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and First Farms.
Diversification Opportunities for Carlsberg and First Farms
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlsberg and First is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and First Farms AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Farms 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 First Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Farms AS has no effect on the direction of Carlsberg i.e., Carlsberg and First Farms go up and down completely randomly.
Pair Corralation between Carlsberg and First Farms
Assuming the 90 days trading horizon Carlsberg AS is expected to generate 1.12 times more return on investment than First Farms. However, Carlsberg is 1.12 times more volatile than First Farms AS. It trades about 0.15 of its potential returns per unit of risk. First Farms AS is currently generating about 0.06 per unit of risk. If you would invest 85,400 in Carlsberg AS on November 5, 2024 and sell it today you would earn a total of 3,800 from holding Carlsberg AS or generate 4.45% 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. First Farms AS
Performance |
| Timeline |
| Carlsberg AS |
| First Farms AS |
Carlsberg and First Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and First Farms
The main advantage of trading using opposite Carlsberg and First Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, First Farms 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 First Farms will offset losses from the drop in First Farms' long position.| Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg AS |
| First Farms vs. HH International AS | First Farms vs. SKAKO AS | First Farms vs. Spar Nord Bank | First Farms vs. Matas 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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