Correlation Between Strategic Investments and Carlsberg
Can any of the company-specific risk be diversified away by investing in both Strategic Investments 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 Strategic Investments and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Investments AS and Carlsberg AS, you can compare the effects of market volatilities on Strategic Investments 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 Strategic Investments with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Carlsberg.
Diversification Opportunities for Strategic Investments and Carlsberg
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Strategic and Carlsberg is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Strategic Investments 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 Strategic Investments 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 Strategic Investments i.e., Strategic Investments and Carlsberg go up and down completely randomly.
Pair Corralation between Strategic Investments and Carlsberg
Assuming the 90 days trading horizon Strategic Investments AS is expected to generate 1.22 times more return on investment than Carlsberg. However, Strategic Investments is 1.22 times more volatile than Carlsberg AS. It trades about -0.01 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.1 per unit of risk. If you would invest 109.00 in Strategic Investments AS on September 1, 2024 and sell it today you would lose (1.00) from holding Strategic Investments AS or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Investments AS vs. Carlsberg AS
Performance |
| Timeline |
| Strategic Investments |
| Carlsberg AS |
Strategic Investments and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and Carlsberg
The main advantage of trading using opposite Strategic Investments and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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.| Strategic Investments vs. Newcap Holding AS | Strategic Investments vs. SKAKO AS | Strategic Investments vs. Rovsing AS | Strategic Investments vs. Danske Invest |
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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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