Correlation Between Carlsberg and Netcompany Group

Can any of the company-specific risk be diversified away by investing in both Carlsberg and Netcompany 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 Netcompany 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 Netcompany Group AS, you can compare the effects of market volatilities on Carlsberg and Netcompany 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 Netcompany Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Netcompany Group.

Diversification Opportunities for Carlsberg and Netcompany Group

-0.78

Correlation Coefficient

Carlsberg  Netcompany Group

Pay attention - limited upside

The 3 months correlation between Carlsberg and Netcompany is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Netcompany Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcompany Group 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 Netcompany Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcompany Group has no effect on the direction of Carlsberg i.e., Carlsberg and Netcompany Group go up and down completely randomly.

Pair Corralation between Carlsberg and Netcompany Group

Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the Netcompany Group. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.15 times less risky than Netcompany Group. The stock trades about -0.03 of its potential returns per unit of risk. The Netcompany Group AS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  29,480  in Netcompany Group AS on September 4, 2024 and sell it today you would earn a total of  6,920  from holding Netcompany Group AS or generate 23.47% return on investment over 90 days.

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

Carlsberg AS  vs.  Netcompany Group AS

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 somewhat strong basic indicators, Carlsberg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Netcompany Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Netcompany Group AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Netcompany Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlsberg and Netcompany Group

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

The idea behind Carlsberg AS and Netcompany Group AS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.