Correlation Between Carlsberg and Molson Coors

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

By analyzing existing cross correlation between Carlsberg AS and Molson Coors Beverage, you can compare the effects of market volatilities on Carlsberg and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Molson Coors.

Diversification Opportunities for Carlsberg and Molson Coors

0.82

Correlation Coefficient

Carlsberg  Molson Coors

Very poor diversification

The 3 months correlation between Carlsberg and Molson is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Carlsberg i.e., Carlsberg and Molson Coors go up and down completely randomly.

Pair Corralation between Carlsberg and Molson Coors

Assuming the 90 days horizon Carlsberg AS is expected to generate 0.45 times more return on investment than Molson Coors. However, Carlsberg AS is 2.24 times less risky than Molson Coors. It trades about 0.16 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about -0.01 per unit of risk. If you would invest  2,441  in Carlsberg AS on December 30, 2024 and sell it today you would earn a total of  127.00  from holding Carlsberg AS or generate 5.2% return on investment over 90 days.

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

Carlsberg AS  vs.  Molson Coors Beverage

Carlsberg AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Carlsberg showed solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Beverage

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carlsberg and Molson Coors

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

The idea behind Carlsberg AS and Molson Coors Beverage 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.