Correlation Between Carlsberg Brewery and EA Technique

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

Diversification Opportunities for Carlsberg Brewery and EA Technique

-0.19

Correlation Coefficient

Carlsberg Brewery  EA Technique

Good diversification

The 3 months correlation between Carlsberg and 5259 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and EA Technique M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Technique M 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 EA Technique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Technique M has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and EA Technique go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and EA Technique

Assuming the 90 days trading horizon Carlsberg Brewery Malaysia is expected to generate 0.59 times more return on investment than EA Technique. However, Carlsberg Brewery Malaysia is 1.69 times less risky than EA Technique. It trades about 0.14 of its potential returns per unit of risk. EA Technique M is currently generating about 0.01 per unit of risk. If you would invest  1,911  in Carlsberg Brewery Malaysia on September 2, 2024 and sell it today you would earn a total of  181.00  from holding Carlsberg Brewery Malaysia or generate 9.47% return on investment over 90 days.

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

Carlsberg Brewery Malaysia  vs.  EA Technique M

Carlsberg Brewery

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 11 (%) 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.

EA Technique M

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EA Technique M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, EA Technique 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 EA Technique

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

The idea behind Carlsberg Brewery Malaysia and EA Technique M 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.