Correlation Between KOBE STEEL and Carlsberg A/S
Can any of the company-specific risk be diversified away by investing in both KOBE STEEL 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 KOBE STEEL 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 KOBE STEEL LTD and Carlsberg AS, you can compare the effects of market volatilities on KOBE STEEL 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 KOBE STEEL with a short position of Carlsberg A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOBE STEEL and Carlsberg A/S.
Diversification Opportunities for KOBE STEEL and Carlsberg A/S
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KOBE and Carlsberg is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding KOBE STEEL LTD and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg A/S and KOBE STEEL 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 KOBE STEEL LTD 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 KOBE STEEL i.e., KOBE STEEL and Carlsberg A/S go up and down completely randomly.
Pair Corralation between KOBE STEEL and Carlsberg A/S
Assuming the 90 days trading horizon KOBE STEEL LTD is expected to generate 1.55 times more return on investment than Carlsberg A/S. However, KOBE STEEL is 1.55 times more volatile than Carlsberg AS. It trades about 0.32 of its potential returns per unit of risk. Carlsberg AS is currently generating about 0.11 per unit of risk. If you would invest 902.00 in KOBE STEEL LTD on October 23, 2024 and sell it today you would earn a total of 86.00 from holding KOBE STEEL LTD or generate 9.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KOBE STEEL LTD vs. Carlsberg AS
Performance |
| Timeline |
| KOBE STEEL LTD |
| Carlsberg A/S |
KOBE STEEL and Carlsberg A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KOBE STEEL and Carlsberg A/S
The main advantage of trading using opposite KOBE STEEL and Carlsberg A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOBE STEEL 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.The idea behind KOBE STEEL LTD and Carlsberg AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Carlsberg A/S vs. KOBE STEEL LTD | Carlsberg A/S vs. United States Steel | Carlsberg A/S vs. UNIVERSAL MUSIC GROUP | Carlsberg A/S vs. ANGANG STEEL H |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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