Correlation Between Carlsberg and Kerry Group

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

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

Diversification Opportunities for Carlsberg and Kerry Group

0.72

Correlation Coefficient

Carlsberg  Kerry Group

Poor diversification

The 3 months correlation between Carlsberg and Kerry is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Kerry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry Group PLC and Carlsberg 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 Carlsberg AS are associated (or correlated) with Kerry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry Group PLC has no effect on the direction of Carlsberg i.e., Carlsberg and Kerry Group go up and down completely randomly.

Pair Corralation between Carlsberg and Kerry Group

Assuming the 90 days horizon Carlsberg AS is expected to under-perform the Kerry Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.22 times less risky than Kerry Group. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Kerry Group PLC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  10,275  in Kerry Group PLC on October 6, 2024 and sell it today you would lose (606.00) from holding Kerry Group PLC or give up 5.9% of portfolio value over 90 days.

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

Carlsberg AS  vs.  Kerry Group PLC

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. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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.

Kerry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kerry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kerry Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carlsberg and Kerry Group

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

The idea behind Carlsberg AS and Kerry Group PLC 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.