Correlation Between UIE PLC and Carlsberg
Can any of the company-specific risk be diversified away by investing in both UIE PLC 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 UIE PLC and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UIE PLC and Carlsberg AS, you can compare the effects of market volatilities on UIE PLC 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 UIE PLC with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of UIE PLC and Carlsberg.
Diversification Opportunities for UIE PLC and Carlsberg
Very good diversification
The 3 months correlation between UIE and Carlsberg is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding UIE PLC and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and UIE PLC 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 UIE PLC 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 UIE PLC i.e., UIE PLC and Carlsberg go up and down completely randomly.
Pair Corralation between UIE PLC and Carlsberg
Assuming the 90 days trading horizon UIE PLC is expected to under-perform the Carlsberg. But the stock apears to be less risky and, when comparing its historical volatility, UIE PLC is 1.66 times less risky than Carlsberg. The stock trades about -0.11 of its potential returns per unit of risk. The Carlsberg AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 85,000 in Carlsberg AS on November 9, 2024 and sell it today you would earn a total of 400.00 from holding Carlsberg AS or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UIE PLC vs. Carlsberg AS
Performance |
| Timeline |
| UIE PLC |
| Carlsberg AS |
UIE PLC and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UIE PLC and Carlsberg
The main advantage of trading using opposite UIE PLC and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UIE PLC 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.| UIE PLC vs. Per Aarsleff Holding | UIE PLC vs. Schouw Co | UIE PLC vs. Ringkjoebing Landbobank AS | UIE PLC vs. Jeudan |
| Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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