Correlation Between Carlsberg and Orsted AS
Can any of the company-specific risk be diversified away by investing in both Carlsberg and Orsted AS 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 Orsted AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Orsted AS, you can compare the effects of market volatilities on Carlsberg and Orsted AS 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 Orsted AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Orsted AS.
Diversification Opportunities for Carlsberg and Orsted AS
Poor diversification
The 3 months correlation between Carlsberg and Orsted is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted 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 Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Carlsberg i.e., Carlsberg and Orsted AS go up and down completely randomly.
Pair Corralation between Carlsberg and Orsted AS
Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the Orsted AS. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.08 times less risky than Orsted AS. The stock trades about -0.03 of its potential returns per unit of risk. The Orsted AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 33,880 in Orsted AS on September 4, 2024 and sell it today you would earn a total of 4,260 from holding Orsted AS or generate 12.57% 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. Orsted AS
Performance |
| Timeline |
| Carlsberg AS |
| Orsted AS |
Carlsberg and Orsted AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and Orsted AS
The main advantage of trading using opposite Carlsberg and Orsted AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, Orsted AS 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 Orsted AS will offset losses from the drop in Orsted AS's long position.| Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg AS |
| Orsted AS vs. Vestjysk Bank AS | Orsted AS vs. Fynske Bank AS | Orsted AS vs. Nordinvestments AS | Orsted AS vs. Djurslands Bank |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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