Correlation Between Carlsberg Brewery and CB Industrial

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

Diversification Opportunities for Carlsberg Brewery and CB Industrial

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Carlsberg and 7076 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and CB Industrial Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Industrial Product 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 CB Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Industrial Product has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and CB Industrial go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and CB Industrial

Assuming the 90 days trading horizon Carlsberg Brewery Malaysia is expected to generate 0.47 times more return on investment than CB Industrial. However, Carlsberg Brewery Malaysia is 2.15 times less risky than CB Industrial. It trades about 0.05 of its potential returns per unit of risk. CB Industrial Product is currently generating about -0.03 per unit of risk. If you would invest  1,958  in Carlsberg Brewery Malaysia on October 24, 2024 and sell it today you would earn a total of  44.00  from holding Carlsberg Brewery Malaysia or generate 2.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Carlsberg Brewery Malaysia  vs.  CB Industrial Product

 Performance 
       Timeline  
Carlsberg Brewery 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 4 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.
CB Industrial Product 

Risk-Adjusted Performance

0 of 100

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

Carlsberg Brewery and CB Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carlsberg Brewery and CB Industrial

The main advantage of trading using opposite Carlsberg Brewery and CB Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg Brewery position performs unexpectedly, CB Industrial 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 CB Industrial will offset losses from the drop in CB Industrial's long position.
The idea behind Carlsberg Brewery Malaysia and CB Industrial Product 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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