Correlation Between Alm Brand and Carlsberg

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

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

Diversification Opportunities for Alm Brand and Carlsberg

0.96

Correlation Coefficient

Alm Brand  Carlsberg

Almost no diversification

The 3 months correlation between Alm and Carlsberg is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Alm Brand and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Alm Brand 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 Alm Brand are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Alm Brand i.e., Alm Brand and Carlsberg go up and down completely randomly.

Pair Corralation between Alm Brand and Carlsberg

Assuming the 90 days trading horizon Alm Brand is expected to generate 1.62 times less return on investment than Carlsberg. But when comparing it to its historical volatility, Alm Brand is 1.32 times less risky than Carlsberg. It trades about 0.24 of its potential returns per unit of risk. Carlsberg AS is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  67,873  in Carlsberg AS on December 24, 2024 and sell it today you would earn a total of  20,827  from holding Carlsberg AS or generate 30.69% return on investment over 90 days.

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

Alm Brand  vs.  Carlsberg AS

Alm Brand

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alm Brand are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Alm Brand displayed solid returns over the last few months and may actually be approaching a breakup point.

Carlsberg AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Carlsberg sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alm Brand and Carlsberg

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

The idea behind Alm Brand and Carlsberg 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.