Correlation Between Carlsberg Brewery and YX Precious

Can any of the company-specific risk be diversified away by investing in both Carlsberg Brewery and YX Precious 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 Carlsberg Brewery and YX Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlsberg Brewery Malaysia and YX Precious Metals, you can compare the effects of market volatilities on Carlsberg Brewery and YX Precious 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 Carlsberg Brewery with a short position of YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg Brewery and YX Precious.

Diversification Opportunities for Carlsberg Brewery and YX Precious

0.23

Correlation Coefficient

Carlsberg Brewery  YX Precious

Modest diversification

The 3 months correlation between Carlsberg and 0250 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals and Carlsberg Brewery 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 Carlsberg Brewery Malaysia are associated (or correlated) with YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and YX Precious go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and YX Precious

Assuming the 90 days trading horizon Carlsberg Brewery Malaysia is expected to under-perform the YX Precious. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg Brewery Malaysia is 2.95 times less risky than YX Precious. The stock trades about -0.24 of its potential returns per unit of risk. The YX Precious Metals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  24.00  in YX Precious Metals on December 4, 2024 and sell it today you would lose (1.00) from holding YX Precious Metals or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Carlsberg Brewery Malaysia  vs.  YX Precious Metals

Carlsberg Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlsberg Brewery Malaysia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

YX Precious Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days YX Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, YX Precious is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Carlsberg Brewery and YX Precious

The main advantage of trading using opposite Carlsberg Brewery and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg Brewery position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.

The idea behind Carlsberg Brewery Malaysia and YX Precious Metals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.