Correlation Between North Media and Carlsberg
Can any of the company-specific risk be diversified away by investing in both North Media and Carlsberg 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 North Media and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Media AS and Carlsberg AS, you can compare the effects of market volatilities on North Media and Carlsberg 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 North Media with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and Carlsberg.
Diversification Opportunities for North Media and Carlsberg
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between North and Carlsberg is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and North Media 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 North Media AS are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of North Media i.e., North Media and Carlsberg go up and down completely randomly.
Pair Corralation between North Media and Carlsberg
Assuming the 90 days trading horizon North Media is expected to generate 3.07 times less return on investment than Carlsberg. In addition to that, North Media is 2.39 times more volatile than Carlsberg AS. It trades about 0.05 of its total potential returns per unit of risk. Carlsberg AS is currently generating about 0.39 per unit of volatility. If you would invest 69,200 in Carlsberg AS on November 4, 2024 and sell it today you would earn a total of 6,260 from holding Carlsberg AS or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Media AS vs. Carlsberg AS
Performance |
| Timeline |
| North Media AS |
| Carlsberg AS |
North Media and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and Carlsberg
The main advantage of trading using opposite North Media and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media position performs unexpectedly, Carlsberg 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 will offset losses from the drop in Carlsberg's long position.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| Carlsberg vs. Prime Office AS | Carlsberg vs. Djurslands Bank | Carlsberg vs. PARKEN Sport Entertainment | Carlsberg vs. Dataproces Group AS |
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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