Correlation Between Carlsberg and Fast Ejendom

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

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

Diversification Opportunities for Carlsberg and Fast Ejendom

-0.3

Correlation Coefficient

Carlsberg  Fast Ejendom

Very good diversification

The 3 months correlation between Carlsberg and Fast is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom 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 Fast Ejendom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Ejendom has no effect on the direction of Carlsberg i.e., Carlsberg and Fast Ejendom go up and down completely randomly.

Pair Corralation between Carlsberg and Fast Ejendom

Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the Fast Ejendom. In addition to that, Carlsberg is 1.11 times more volatile than Fast Ejendom. It trades about -0.21 of its total potential returns per unit of risk. Fast Ejendom is currently generating about 0.08 per unit of volatility. If you would invest  11,500  in Fast Ejendom on September 13, 2024 and sell it today you would earn a total of  800.00  from holding Fast Ejendom or generate 6.96% return on investment over 90 days.

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

Carlsberg AS  vs.  Fast Ejendom

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Fast Ejendom

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Ejendom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Fast Ejendom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Carlsberg and Fast Ejendom

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

The idea behind Carlsberg AS and Fast Ejendom 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.