Correlation Between Alefarm Brewing and Gyldendal

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

By analyzing existing cross correlation between Alefarm Brewing AS and Gyldendal AS, you can compare the effects of market volatilities on Alefarm Brewing and Gyldendal 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 Alefarm Brewing with a short position of Gyldendal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alefarm Brewing and Gyldendal.

Diversification Opportunities for Alefarm Brewing and Gyldendal

0.11

Correlation Coefficient

Alefarm Brewing  Gyldendal

Average diversification

The 3 months correlation between Alefarm and Gyldendal is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alefarm Brewing AS and Gyldendal AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyldendal AS and Alefarm Brewing 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 Alefarm Brewing AS are associated (or correlated) with Gyldendal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyldendal AS has no effect on the direction of Alefarm Brewing i.e., Alefarm Brewing and Gyldendal go up and down completely randomly.

Pair Corralation between Alefarm Brewing and Gyldendal

Assuming the 90 days trading horizon Alefarm Brewing AS is expected to under-perform the Gyldendal. But the stock apears to be less risky and, when comparing its historical volatility, Alefarm Brewing AS is 1.05 times less risky than Gyldendal. The stock trades about -0.07 of its potential returns per unit of risk. The Gyldendal AS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  158,000  in Gyldendal AS on October 4, 2024 and sell it today you would lose (22,000) from holding Gyldendal AS or give up 13.92% of portfolio value over 90 days.

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

Alefarm Brewing AS  vs.  Gyldendal AS

Alefarm Brewing AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alefarm Brewing AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gyldendal AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gyldendal AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Alefarm Brewing and Gyldendal

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

The idea behind Alefarm Brewing AS and Gyldendal AS 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.