Correlation Between Genting Malaysia and Carlsberg Brewery

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

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

Diversification Opportunities for Genting Malaysia and Carlsberg Brewery

-0.85

Correlation Coefficient

Genting Malaysia  Carlsberg Brewery

Pay attention - limited upside

The 3 months correlation between Genting and Carlsberg is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Genting Malaysia Bhd and Carlsberg Brewery Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg Brewery and Genting Malaysia 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 Genting Malaysia Bhd are associated (or correlated) with Carlsberg Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg Brewery has no effect on the direction of Genting Malaysia i.e., Genting Malaysia and Carlsberg Brewery go up and down completely randomly.

Pair Corralation between Genting Malaysia and Carlsberg Brewery

Assuming the 90 days trading horizon Genting Malaysia Bhd is expected to under-perform the Carlsberg Brewery. In addition to that, Genting Malaysia is 1.31 times more volatile than Carlsberg Brewery Malaysia. It trades about -0.01 of its total potential returns per unit of risk. Carlsberg Brewery Malaysia is currently generating about 0.0 per unit of volatility. If you would invest  2,095  in Carlsberg Brewery Malaysia on September 29, 2024 and sell it today you would lose (21.00) from holding Carlsberg Brewery Malaysia or give up 1.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Genting Malaysia Bhd  vs.  Carlsberg Brewery Malaysia

Genting Malaysia Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genting Malaysia Bhd 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.

Carlsberg Brewery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 9 (%) 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.

Pair Trading with Genting Malaysia and Carlsberg Brewery

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

The idea behind Genting Malaysia Bhd and Carlsberg Brewery Malaysia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..