Correlation Between Carlsberg and X FAB
Can any of the company-specific risk be diversified away by investing in both Carlsberg and X FAB 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 X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and X FAB Silicon Foundries, you can compare the effects of market volatilities on Carlsberg and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and X FAB.
Diversification Opportunities for Carlsberg and X FAB
Poor diversification
The 3 months correlation between Carlsberg and XFB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Carlsberg i.e., Carlsberg and X FAB go up and down completely randomly.
Pair Corralation between Carlsberg and X FAB
Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.92 times less risky than X FAB. The stock trades about -0.08 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 462.00 in X FAB Silicon Foundries on September 12, 2024 and sell it today you would earn a total of 36.00 from holding X FAB Silicon Foundries or generate 7.79% 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. X FAB Silicon Foundries
Performance |
| Timeline |
| Carlsberg AS |
| X FAB Silicon |
Carlsberg and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlsberg and X FAB
The main advantage of trading using opposite Carlsberg and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Carlsberg vs. CSSC Offshore Marine | Carlsberg vs. ALERION CLEANPOWER | Carlsberg vs. Air Lease | Carlsberg vs. ULTRA CLEAN HLDGS |
| X FAB vs. PLAYTIKA HOLDING DL 01 | X FAB vs. Jacquet Metal Service | X FAB vs. PARKEN Sport Entertainment | X FAB vs. TOWNSQUARE MEDIA INC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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