Correlation Between Carlsberg and FOMECONMEXSAB DCV

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

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

Diversification Opportunities for Carlsberg and FOMECONMEXSAB DCV

0.81

Correlation Coefficient

Carlsberg  FOMECONMEXSAB DCV

Very poor diversification

The 3 months correlation between Carlsberg and FOMECONMEXSAB is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and FOMECONMEXSAB DCV UTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOMECONMEXSAB DCV UTS 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 FOMECONMEXSAB DCV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOMECONMEXSAB DCV UTS has no effect on the direction of Carlsberg i.e., Carlsberg and FOMECONMEXSAB DCV go up and down completely randomly.

Pair Corralation between Carlsberg and FOMECONMEXSAB DCV

Assuming the 90 days trading horizon Carlsberg is expected to generate 4.18 times less return on investment than FOMECONMEXSAB DCV. But when comparing it to its historical volatility, Carlsberg AS is 1.57 times less risky than FOMECONMEXSAB DCV. It trades about 0.02 of its potential returns per unit of risk. FOMECONMEXSAB DCV UTS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  432.00  in FOMECONMEXSAB DCV UTS on September 26, 2024 and sell it today you would earn a total of  388.00  from holding FOMECONMEXSAB DCV UTS or generate 89.81% return on investment over 90 days.

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

Carlsberg AS  vs.  FOMECONMEXSAB DCV UTS

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 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FOMECONMEXSAB DCV UTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOMECONMEXSAB DCV UTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, FOMECONMEXSAB DCV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carlsberg and FOMECONMEXSAB DCV

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

The idea behind Carlsberg AS and FOMECONMEXSAB DCV UTS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.