Correlation Between Carlsberg and Park Bellheimer

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

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

Diversification Opportunities for Carlsberg and Park Bellheimer

-0.06

Correlation Coefficient

Carlsberg  Park Bellheimer

Good diversification

The 3 months correlation between Carlsberg and Park is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Park Bellheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Bellheimer AG 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 Park Bellheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Bellheimer AG has no effect on the direction of Carlsberg i.e., Carlsberg and Park Bellheimer go up and down completely randomly.

Pair Corralation between Carlsberg and Park Bellheimer

Assuming the 90 days trading horizon Carlsberg is expected to generate 7.51 times less return on investment than Park Bellheimer. But when comparing it to its historical volatility, Carlsberg AS is 4.13 times less risky than Park Bellheimer. It trades about 0.09 of its potential returns per unit of risk. Park Bellheimer AG is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Park Bellheimer AG on October 25, 2024 and sell it today you would earn a total of  46.00  from holding Park Bellheimer AG or generate 21.9% return on investment over 90 days.

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

Carlsberg AS  vs.  Park Bellheimer AG

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Park Bellheimer AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Bellheimer AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Park Bellheimer reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlsberg and Park Bellheimer

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

The idea behind Carlsberg AS and Park Bellheimer AG 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.