Correlation Between ECM Libra and Carlsberg Brewery

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Can any of the company-specific risk be diversified away by investing in both ECM Libra and Carlsberg Brewery 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 ECM Libra and Carlsberg Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECM Libra Financial and Carlsberg Brewery Malaysia, you can compare the effects of market volatilities on ECM Libra and Carlsberg Brewery 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 ECM Libra with a short position of Carlsberg Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECM Libra and Carlsberg Brewery.

Diversification Opportunities for ECM Libra and Carlsberg Brewery

ECMCarlsbergDiversified AwayECMCarlsbergDiversified Away100%
-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between ECM and Carlsberg is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ECM Libra Financial and Carlsberg Brewery Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg Brewery and ECM Libra 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 ECM Libra Financial are associated (or correlated) with Carlsberg Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg Brewery has no effect on the direction of ECM Libra i.e., ECM Libra and Carlsberg Brewery go up and down completely randomly.

Pair Corralation between ECM Libra and Carlsberg Brewery

Assuming the 90 days trading horizon ECM Libra Financial is expected to generate 6.35 times more return on investment than Carlsberg Brewery. However, ECM Libra is 6.35 times more volatile than Carlsberg Brewery Malaysia. It trades about 0.09 of its potential returns per unit of risk. Carlsberg Brewery Malaysia is currently generating about -0.19 per unit of risk. If you would invest  17.00  in ECM Libra Financial on October 27, 2024 and sell it today you would earn a total of  1.00  from holding ECM Libra Financial or generate 5.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ECM Libra Financial  vs.  Carlsberg Brewery Malaysia

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-505
JavaScript chart by amCharts 3.21.152143 2836
       Timeline  
ECM Libra Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ECM Libra Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, ECM Libra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.170.1750.180.1850.190.1950.2
Carlsberg Brewery 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Carlsberg Brewery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan19.52020.521

ECM Libra and Carlsberg Brewery Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.05-4.53-3.01-1.490.01.462.984.496.07.52 0.20.40.60.8
JavaScript chart by amCharts 3.21.152143 2836
       Returns  

Pair Trading with ECM Libra and Carlsberg Brewery

The main advantage of trading using opposite ECM Libra and Carlsberg Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECM Libra position performs unexpectedly, Carlsberg Brewery 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 Brewery will offset losses from the drop in Carlsberg Brewery's long position.
The idea behind ECM Libra Financial and Carlsberg Brewery Malaysia 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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