Correlation Between Carlsberg and ViroGates

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

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

Diversification Opportunities for Carlsberg and ViroGates

-0.77

Correlation Coefficient

Carlsberg  ViroGates

Pay attention - limited upside

The 3 months correlation between Carlsberg and ViroGates is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and ViroGates AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViroGates AS 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 ViroGates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViroGates AS has no effect on the direction of Carlsberg i.e., Carlsberg and ViroGates go up and down completely randomly.

Pair Corralation between Carlsberg and ViroGates

Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the ViroGates. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 6.19 times less risky than ViroGates. The stock trades about -0.3 of its potential returns per unit of risk. The ViroGates AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,340  in ViroGates AS on October 9, 2024 and sell it today you would lose (10.00) from holding ViroGates AS or give up 0.75% of portfolio value over 90 days.

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

Carlsberg AS  vs.  ViroGates 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 unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ViroGates AS

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Carlsberg and ViroGates

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

The idea behind Carlsberg AS and ViroGates 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.