Correlation Between Carlsberg and Silkeborg

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

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

Diversification Opportunities for Carlsberg and Silkeborg

-0.49

Correlation Coefficient

Carlsberg  Silkeborg

Very good diversification

The 3 months correlation between Carlsberg and Silkeborg is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Silkeborg IF Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkeborg IF Invest 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 Silkeborg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkeborg IF Invest has no effect on the direction of Carlsberg i.e., Carlsberg and Silkeborg go up and down completely randomly.

Pair Corralation between Carlsberg and Silkeborg

Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the Silkeborg. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.7 times less risky than Silkeborg. The stock trades about -0.08 of its potential returns per unit of risk. The Silkeborg IF Invest is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,840  in Silkeborg IF Invest on September 13, 2024 and sell it today you would earn a total of  1,160  from holding Silkeborg IF Invest or generate 40.85% return on investment over 90 days.

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

Carlsberg AS  vs.  Silkeborg IF Invest

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Silkeborg IF Invest

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silkeborg IF Invest are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Silkeborg displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlsberg and Silkeborg

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

The idea behind Carlsberg AS and Silkeborg IF Invest 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.