Correlation Between Carlsberg Brewery and IHH Healthcare

Can any of the company-specific risk be diversified away by investing in both Carlsberg Brewery and IHH Healthcare 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 IHH Healthcare 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 IHH Healthcare Bhd, you can compare the effects of market volatilities on Carlsberg Brewery and IHH Healthcare 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 IHH Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg Brewery and IHH Healthcare.

Diversification Opportunities for Carlsberg Brewery and IHH Healthcare

0.49

Correlation Coefficient

Carlsberg Brewery  IHH Healthcare

Very weak diversification

The 3 months correlation between Carlsberg and IHH is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and IHH Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHH Healthcare Bhd 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 IHH Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHH Healthcare Bhd has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and IHH Healthcare go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and IHH Healthcare

Assuming the 90 days trading horizon Carlsberg Brewery is expected to generate 20.11 times less return on investment than IHH Healthcare. In addition to that, Carlsberg Brewery is 1.04 times more volatile than IHH Healthcare Bhd. It trades about 0.0 of its total potential returns per unit of risk. IHH Healthcare Bhd is currently generating about 0.06 per unit of volatility. If you would invest  565.00  in IHH Healthcare Bhd on September 4, 2024 and sell it today you would earn a total of  157.00  from holding IHH Healthcare Bhd or generate 27.79% return on investment over 90 days.

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

Carlsberg Brewery Malaysia  vs.  IHH Healthcare Bhd

Carlsberg Brewery

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Carlsberg Brewery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IHH Healthcare Bhd

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IHH Healthcare Bhd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, IHH Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlsberg Brewery and IHH Healthcare

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

The idea behind Carlsberg Brewery Malaysia and IHH Healthcare Bhd 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.