Correlation Between Ambev SA and Carlsberg

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

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

Diversification Opportunities for Ambev SA and Carlsberg

0.5

Correlation Coefficient

Ambev SA  Carlsberg

Very weak diversification

The 3 months correlation between Ambev and Carlsberg is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ambev SA and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Ambev SA 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 Ambev SA 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 Ambev SA i.e., Ambev SA and Carlsberg go up and down completely randomly.

Pair Corralation between Ambev SA and Carlsberg

Assuming the 90 days trading horizon Ambev SA is expected to generate 1.43 times more return on investment than Carlsberg. However, Ambev SA is 1.43 times more volatile than Carlsberg AS. It trades about 0.01 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.15 per unit of risk. If you would invest  196.00  in Ambev SA on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Ambev SA or generate 0.0% return on investment over 90 days.

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

Ambev SA  vs.  Carlsberg AS

Ambev SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambev SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ambev SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carlsberg AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ambev SA and Carlsberg

The main advantage of trading using opposite Ambev SA and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambev SA 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 Ambev SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.