Correlation Between Carlsberg and Sparindex INDEX

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

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

Diversification Opportunities for Carlsberg and Sparindex INDEX

0.71

Correlation Coefficient

Carlsberg  Sparindex INDEX

Poor diversification

The 3 months correlation between Carlsberg and Sparindex is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Sparindex INDEX Bredygtige in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparindex INDEX Bred 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 Sparindex INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparindex INDEX Bred has no effect on the direction of Carlsberg i.e., Carlsberg and Sparindex INDEX go up and down completely randomly.

Pair Corralation between Carlsberg and Sparindex INDEX

Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the Sparindex INDEX. In addition to that, Carlsberg is 1.98 times more volatile than Sparindex INDEX Bredygtige. It trades about -0.09 of its total potential returns per unit of risk. Sparindex INDEX Bredygtige is currently generating about -0.03 per unit of volatility. If you would invest  12,790  in Sparindex INDEX Bredygtige on October 23, 2024 and sell it today you would lose (175.00) from holding Sparindex INDEX Bredygtige or give up 1.37% of portfolio value over 90 days.

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

Carlsberg AS  vs.  Sparindex INDEX Bredygtige

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 unfluctuating 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.

Sparindex INDEX Bred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparindex INDEX Bredygtige has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Sparindex INDEX is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Carlsberg and Sparindex INDEX

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

The idea behind Carlsberg AS and Sparindex INDEX Bredygtige 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.