Correlation Between Tambun Indah and Carlsberg Brewery

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

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

Diversification Opportunities for Tambun Indah and Carlsberg Brewery

-0.6

Correlation Coefficient

Tambun Indah  Carlsberg Brewery

Excellent diversification

The 3 months correlation between Tambun and Carlsberg is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tambun Indah Land and Carlsberg Brewery Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg Brewery and Tambun Indah 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 Tambun Indah Land 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 Tambun Indah i.e., Tambun Indah and Carlsberg Brewery go up and down completely randomly.

Pair Corralation between Tambun Indah and Carlsberg Brewery

Assuming the 90 days trading horizon Tambun Indah Land is expected to under-perform the Carlsberg Brewery. In addition to that, Tambun Indah is 1.32 times more volatile than Carlsberg Brewery Malaysia. It trades about -0.06 of its total potential returns per unit of risk. Carlsberg Brewery Malaysia is currently generating about 0.13 per unit of volatility. If you would invest  1,952  in Carlsberg Brewery Malaysia on September 5, 2024 and sell it today you would earn a total of  158.00  from holding Carlsberg Brewery Malaysia or generate 8.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Tambun Indah Land  vs.  Carlsberg Brewery Malaysia

Tambun Indah Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carlsberg Brewery

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 10 (%) 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 Tambun Indah and Carlsberg Brewery

The main advantage of trading using opposite Tambun Indah and Carlsberg Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tambun Indah 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 Tambun Indah Land 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.