Correlation Between Unilever PLC and Carlsberg
Can any of the company-specific risk be diversified away by investing in both Unilever 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 Unilever PLC and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever PLC and Carlsberg AS B, you can compare the effects of market volatilities on Unilever 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 Unilever PLC with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever PLC and Carlsberg.
Diversification Opportunities for Unilever PLC and Carlsberg
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Unilever and Carlsberg is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Unilever PLC and Carlsberg AS B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS B and Unilever 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 Unilever 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 B has no effect on the direction of Unilever PLC i.e., Unilever PLC and Carlsberg go up and down completely randomly.
Pair Corralation between Unilever PLC and Carlsberg
Assuming the 90 days trading horizon Unilever PLC is expected to generate 0.61 times more return on investment than Carlsberg. However, Unilever PLC is 1.65 times less risky than Carlsberg. It trades about -0.07 of its potential returns per unit of risk. Carlsberg AS B is currently generating about -0.18 per unit of risk. If you would invest 477,073 in Unilever PLC on August 27, 2024 and sell it today you would lose (7,873) from holding Unilever PLC or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever PLC vs. Carlsberg AS B
Performance |
| Timeline |
| Unilever PLC |
| Carlsberg AS B |
Unilever PLC and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever PLC and Carlsberg
The main advantage of trading using opposite Unilever PLC and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever 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.| Unilever PLC vs. Samsung Electronics Co | Unilever PLC vs. Samsung Electronics Co | Unilever PLC vs. Hyundai Motor | Unilever PLC vs. Toyota Motor Corp |
| Carlsberg vs. Darden Restaurants | Carlsberg vs. Thor Mining PLC | Carlsberg vs. Bisichi Mining PLC | Carlsberg vs. Ion Beam Applications |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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