Correlation Between Carlsberg and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both Carlsberg and Tsingtao Brewery 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 Tsingtao Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and Tsingtao Brewery, you can compare the effects of market volatilities on Carlsberg and Tsingtao Brewery 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 Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Tsingtao Brewery.
Diversification Opportunities for Carlsberg and Tsingtao Brewery
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carlsberg and Tsingtao is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Carlsberg i.e., Carlsberg and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between Carlsberg and Tsingtao Brewery
Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the Tsingtao Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.65 times less risky than Tsingtao Brewery. The stock trades about -0.02 of its potential returns per unit of risk. The Tsingtao Brewery is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 482.00 in Tsingtao Brewery on September 12, 2024 and sell it today you would earn a total of 119.00 from holding Tsingtao Brewery or generate 24.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlsberg AS vs. Tsingtao Brewery
Performance |
| Timeline |
| Carlsberg AS |
| Tsingtao Brewery |
Carlsberg and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and Tsingtao Brewery
The main advantage of trading using opposite Carlsberg and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, Tsingtao Brewery 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 Tsingtao Brewery will offset losses from the drop in Tsingtao Brewery's long position.| Carlsberg vs. Quaker Chemical | Carlsberg vs. Sekisui Chemical Co | Carlsberg vs. ARDAGH METAL PACDL 0001 | Carlsberg vs. Evolution Mining Limited |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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