Correlation Between Flow Beverage and Carlsberg

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

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

Diversification Opportunities for Flow Beverage and Carlsberg

-0.51

Correlation Coefficient

Flow Beverage  Carlsberg

Excellent diversification

The 3 months correlation between Flow and Carlsberg is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Flow Beverage Corp and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Flow Beverage 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 Flow Beverage Corp 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 Flow Beverage i.e., Flow Beverage and Carlsberg go up and down completely randomly.

Pair Corralation between Flow Beverage and Carlsberg

Assuming the 90 days horizon Flow Beverage Corp is expected to under-perform the Carlsberg. In addition to that, Flow Beverage is 5.58 times more volatile than Carlsberg AS. It trades about -0.02 of its total potential returns per unit of risk. Carlsberg AS is currently generating about 0.31 per unit of volatility. If you would invest  1,865  in Carlsberg AS on December 29, 2024 and sell it today you would earn a total of  687.00  from holding Carlsberg AS or generate 36.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Flow Beverage Corp  vs.  Carlsberg AS

Flow Beverage Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flow Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 Flow Beverage and Carlsberg

The main advantage of trading using opposite Flow Beverage and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Beverage 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 Flow Beverage Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.