Correlation Between Eq Energy and Carlsberg

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

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

Diversification Opportunities for Eq Energy and Carlsberg

0.57

Correlation Coefficient

Eq Energy  Carlsberg

Very weak diversification

The 3 months correlation between EQLB and Carlsberg is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eq Energy Drink and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Eq Energy 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 Eq Energy Drink are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Eq Energy i.e., Eq Energy and Carlsberg go up and down completely randomly.

Pair Corralation between Eq Energy and Carlsberg

Given the investment horizon of 90 days Eq Energy Drink is expected to generate 13.62 times more return on investment than Carlsberg. However, Eq Energy is 13.62 times more volatile than Carlsberg AS. It trades about 0.12 of its potential returns per unit of risk. Carlsberg AS is currently generating about 0.31 per unit of risk. If you would invest  0.09  in Eq Energy Drink on December 29, 2024 and sell it today you would earn a total of  0.04  from holding Eq Energy Drink or generate 44.44% return on investment over 90 days.

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

Eq Energy Drink  vs.  Carlsberg AS

Eq Energy Drink

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eq Energy Drink are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Eq Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Carlsberg AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Carlsberg showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eq Energy and Carlsberg

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

The idea behind Eq Energy Drink and Carlsberg 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.