Correlation Between Carlsberg and BankInv Kort

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

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

Diversification Opportunities for Carlsberg and BankInv Kort

0.88

Correlation Coefficient

Carlsberg  BankInv Kort

Very poor diversification

The 3 months correlation between Carlsberg and BankInv is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and BankInv Kort HY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv Kort HY 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 BankInv Kort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv Kort HY has no effect on the direction of Carlsberg i.e., Carlsberg and BankInv Kort go up and down completely randomly.

Pair Corralation between Carlsberg and BankInv Kort

Assuming the 90 days trading horizon Carlsberg AS is expected to generate 5.77 times more return on investment than BankInv Kort. However, Carlsberg is 5.77 times more volatile than BankInv Kort HY. It trades about 0.28 of its potential returns per unit of risk. BankInv Kort HY is currently generating about 0.07 per unit of risk. If you would invest  66,961  in Carlsberg AS on December 28, 2024 and sell it today you would earn a total of  20,499  from holding Carlsberg AS or generate 30.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Carlsberg AS  vs.  BankInv Kort HY

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.

BankInv Kort HY

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Carlsberg and BankInv Kort

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

The idea behind Carlsberg AS and BankInv Kort HY 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 CEOs Directory module to screen CEOs from public companies around the world.