Correlation Between Carlsberg Brewery and Press Metal

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

Diversification Opportunities for Carlsberg Brewery and Press Metal

-0.5

Correlation Coefficient

Carlsberg Brewery  Press Metal

Very good diversification

The 3 months correlation between Carlsberg and Press is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal 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 Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and Press Metal go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and Press Metal

Assuming the 90 days trading horizon Carlsberg Brewery Malaysia is expected to under-perform the Press Metal. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg Brewery Malaysia is 1.81 times less risky than Press Metal. The stock trades about -0.18 of its potential returns per unit of risk. The Press Metal Bhd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  478.00  in Press Metal Bhd on December 25, 2024 and sell it today you would earn a total of  21.00  from holding Press Metal Bhd or generate 4.39% return on investment over 90 days.

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

Carlsberg Brewery Malaysia  vs.  Press Metal Bhd

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 conflicting 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.

Press Metal Bhd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Press Metal Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Press Metal 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 Press Metal

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

The idea behind Carlsberg Brewery Malaysia and Press Metal 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.