Correlation Between Carlsberg and Copenhagen Airports
Can any of the company-specific risk be diversified away by investing in both Carlsberg and Copenhagen Airports 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 Copenhagen Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Copenhagen Airports AS, you can compare the effects of market volatilities on Carlsberg and Copenhagen Airports 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 Copenhagen Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Copenhagen Airports.
Diversification Opportunities for Carlsberg and Copenhagen Airports
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlsberg and Copenhagen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Copenhagen Airports AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Airports 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 Copenhagen Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Airports has no effect on the direction of Carlsberg i.e., Carlsberg and Copenhagen Airports go up and down completely randomly.
Pair Corralation between Carlsberg and Copenhagen Airports
Assuming the 90 days trading horizon Carlsberg AS is expected to generate 1.24 times more return on investment than Copenhagen Airports. However, Carlsberg is 1.24 times more volatile than Copenhagen Airports AS. It trades about -0.16 of its potential returns per unit of risk. Copenhagen Airports AS is currently generating about -0.21 per unit of risk. If you would invest 94,000 in Carlsberg AS on September 1, 2024 and sell it today you would lose (6,800) from holding Carlsberg AS or give up 7.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Carlsberg AS vs. Copenhagen Airports AS
Performance |
| Timeline |
| Carlsberg AS |
| Copenhagen Airports |
Carlsberg and Copenhagen Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and Copenhagen Airports
The main advantage of trading using opposite Carlsberg and Copenhagen Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, Copenhagen Airports 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 Copenhagen Airports will offset losses from the drop in Copenhagen Airports' long position.| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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