Correlation Between Choice Hotels and Carlsberg A/S
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and Carlsberg A/S 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 Choice Hotels and Carlsberg A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and Carlsberg AS, you can compare the effects of market volatilities on Choice Hotels and Carlsberg A/S 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 Choice Hotels with a short position of Carlsberg A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and Carlsberg A/S.
Diversification Opportunities for Choice Hotels and Carlsberg A/S
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Choice and Carlsberg is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg A/S and Choice Hotels 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 Choice Hotels International are associated (or correlated) with Carlsberg A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg A/S has no effect on the direction of Choice Hotels i.e., Choice Hotels and Carlsberg A/S go up and down completely randomly.
Pair Corralation between Choice Hotels and Carlsberg A/S
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.99 times more return on investment than Carlsberg A/S. However, Choice Hotels International is 1.01 times less risky than Carlsberg A/S. It trades about 0.29 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.09 per unit of risk. If you would invest 12,800 in Choice Hotels International on September 1, 2024 and sell it today you would earn a total of 1,300 from holding Choice Hotels International or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Choice Hotels International vs. Carlsberg AS
Performance |
| Timeline |
| Choice Hotels Intern |
| Carlsberg A/S |
Choice Hotels and Carlsberg A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and Carlsberg A/S
The main advantage of trading using opposite Choice Hotels and Carlsberg A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, Carlsberg A/S 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 Carlsberg A/S will offset losses from the drop in Carlsberg A/S's long position.| Choice Hotels vs. CarsalesCom | Choice Hotels vs. JJ SNACK FOODS | Choice Hotels vs. CN MODERN DAIRY | Choice Hotels vs. Commercial Vehicle Group |
| Carlsberg A/S vs. RCM TECHNOLOGIES | Carlsberg A/S vs. GLG LIFE TECH | Carlsberg A/S vs. PKSHA TECHNOLOGY INC | Carlsberg A/S vs. Lion Biotechnologies |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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