Correlation Between Carlsberg A/S and Boston Beer

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

By analyzing existing cross correlation between Carlsberg AS and The Boston Beer, you can compare the effects of market volatilities on Carlsberg A/S and Boston Beer 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 A/S with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg A/S and Boston Beer.

Diversification Opportunities for Carlsberg A/S and Boston Beer

-0.64

Correlation Coefficient

Carlsberg A/S  Boston Beer

Excellent diversification

The 3 months correlation between Carlsberg and Boston is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Carlsberg A/S 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Carlsberg A/S i.e., Carlsberg A/S and Boston Beer go up and down completely randomly.

Pair Corralation between Carlsberg A/S and Boston Beer

Assuming the 90 days trading horizon Carlsberg AS is expected to generate 2.18 times more return on investment than Boston Beer. However, Carlsberg A/S is 2.18 times more volatile than The Boston Beer. It trades about 0.08 of its potential returns per unit of risk. The Boston Beer is currently generating about -0.2 per unit of risk. If you would invest  10,498  in Carlsberg AS on December 30, 2024 and sell it today you would earn a total of  1,852  from holding Carlsberg AS or generate 17.64% 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.  The Boston Beer

Carlsberg A/S

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Carlsberg A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Carlsberg A/S and Boston Beer

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

The idea behind Carlsberg AS and The Boston Beer 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.