Correlation Between Carlsberg and BankInvest Value

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

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

Diversification Opportunities for Carlsberg and BankInvest Value

-0.57

Correlation Coefficient

Carlsberg  BankInvest Value

Excellent diversification

The 3 months correlation between Carlsberg and BankInvest is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and BankInvest Value Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Value Globale 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 BankInvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Value Globale has no effect on the direction of Carlsberg i.e., Carlsberg and BankInvest Value go up and down completely randomly.

Pair Corralation between Carlsberg and BankInvest Value

Assuming the 90 days trading horizon Carlsberg AS is expected to generate 0.7 times more return on investment than BankInvest Value. However, Carlsberg AS is 1.42 times less risky than BankInvest Value. It trades about 0.28 of its potential returns per unit of risk. BankInvest Value Globale is currently generating about -0.13 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 Against
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Carlsberg AS  vs.  BankInvest Value Globale

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.

BankInvest Value Globale

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Value Globale 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Carlsberg and BankInvest Value

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

The idea behind Carlsberg AS and BankInvest Value Globale 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.