Correlation Between Kerry Group and Carlsberg

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

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

Diversification Opportunities for Kerry Group and Carlsberg

0.72

Correlation Coefficient

Kerry Group  Carlsberg

Poor diversification

The 3 months correlation between Kerry and Carlsberg is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Kerry Group 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 Kerry Group PLC 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 Kerry Group i.e., Kerry Group and Carlsberg go up and down completely randomly.

Pair Corralation between Kerry Group and Carlsberg

Assuming the 90 days horizon Kerry Group PLC is expected to generate 1.08 times more return on investment than Carlsberg. However, Kerry Group is 1.08 times more volatile than Carlsberg AS. It trades about -0.01 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.21 per unit of risk. If you would invest  9,882  in Kerry Group PLC on October 6, 2024 and sell it today you would lose (202.00) from holding Kerry Group PLC or give up 2.04% of portfolio value over 90 days.

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

Kerry Group PLC  vs.  Carlsberg AS

Kerry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kerry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kerry Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kerry Group and Carlsberg

The main advantage of trading using opposite Kerry Group and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group 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 Kerry Group PLC 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.