Correlation Between Carlsberg A/S and HEINEKEN
Can any of the company-specific risk be diversified away by investing in both Carlsberg A/S and HEINEKEN 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 A/S and HEINEKEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and HEINEKEN SP ADR, you can compare the effects of market volatilities on Carlsberg A/S and HEINEKEN 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 A/S with a short position of HEINEKEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg A/S and HEINEKEN.
Diversification Opportunities for Carlsberg A/S and HEINEKEN
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carlsberg and HEINEKEN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and HEINEKEN SP ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEINEKEN SP ADR and Carlsberg A/S 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 HEINEKEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEINEKEN SP ADR has no effect on the direction of Carlsberg A/S i.e., Carlsberg A/S and HEINEKEN go up and down completely randomly.
Pair Corralation between Carlsberg A/S and HEINEKEN
Assuming the 90 days trading horizon Carlsberg AS is expected to generate 1.76 times more return on investment than HEINEKEN. However, Carlsberg A/S is 1.76 times more volatile than HEINEKEN SP ADR. It trades about 0.03 of its potential returns per unit of risk. HEINEKEN SP ADR is currently generating about -0.01 per unit of risk. If you would invest 10,455 in Carlsberg AS on December 1, 2024 and sell it today you would earn a total of 2,245 from holding Carlsberg AS or generate 21.47% 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. HEINEKEN SP ADR
Performance |
| Timeline |
| Carlsberg A/S |
| HEINEKEN SP ADR |
Carlsberg A/S and HEINEKEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg A/S and HEINEKEN
The main advantage of trading using opposite Carlsberg A/S and HEINEKEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg A/S position performs unexpectedly, HEINEKEN 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 HEINEKEN will offset losses from the drop in HEINEKEN's long position.| Carlsberg A/S vs. Australian Agricultural | Carlsberg A/S vs. IRONVELD PLC LS | Carlsberg A/S vs. ALEFARM BREWING DK 05 | Carlsberg A/S vs. Khiron Life Sciences |
| HEINEKEN vs. THAI BEVERAGE | HEINEKEN vs. Gol Intelligent Airlines | HEINEKEN vs. SALESFORCE INC CDR | HEINEKEN vs. Suntory Beverage Food |
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 Stocks Directory module to find actively traded stocks across global markets.
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