Correlation Between Carlsberg A/S and KB HOME

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

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

Diversification Opportunities for Carlsberg A/S and KB HOME

0.35

Correlation Coefficient

Carlsberg A/S  KB HOME

Weak diversification

The 3 months correlation between Carlsberg and KBH is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and KB HOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB HOME 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 KB HOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB HOME has no effect on the direction of Carlsberg A/S i.e., Carlsberg A/S and KB HOME go up and down completely randomly.

Pair Corralation between Carlsberg A/S and KB HOME

Assuming the 90 days trading horizon Carlsberg AS is expected to generate 0.69 times more return on investment than KB HOME. However, Carlsberg AS is 1.46 times less risky than KB HOME. It trades about -0.19 of its potential returns per unit of risk. KB HOME is currently generating about -0.54 per unit of risk. If you would invest  9,764  in Carlsberg AS on October 5, 2024 and sell it today you would lose (410.00) from holding Carlsberg AS or give up 4.2% of portfolio value over 90 days.

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

Carlsberg AS  vs.  KB HOME

Carlsberg A/S

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.

KB HOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB HOME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Carlsberg A/S and KB HOME

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

The idea behind Carlsberg AS and KB HOME 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.