Correlation Between Royal Unibrew and Per Aarsleff

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

By analyzing existing cross correlation between Royal Unibrew AS and Per Aarsleff Holding, you can compare the effects of market volatilities on Royal Unibrew and Per Aarsleff 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 Royal Unibrew with a short position of Per Aarsleff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Unibrew and Per Aarsleff.

Diversification Opportunities for Royal Unibrew and Per Aarsleff

-0.39

Correlation Coefficient

Royal Unibrew  Per Aarsleff

Very good diversification

The 3 months correlation between Royal and Per is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Royal Unibrew AS and Per Aarsleff Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Per Aarsleff Holding and Royal Unibrew 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 Royal Unibrew AS are associated (or correlated) with Per Aarsleff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Per Aarsleff Holding has no effect on the direction of Royal Unibrew i.e., Royal Unibrew and Per Aarsleff go up and down completely randomly.

Pair Corralation between Royal Unibrew and Per Aarsleff

Assuming the 90 days trading horizon Royal Unibrew AS is expected to under-perform the Per Aarsleff. In addition to that, Royal Unibrew is 1.01 times more volatile than Per Aarsleff Holding. It trades about -0.05 of its total potential returns per unit of risk. Per Aarsleff Holding is currently generating about 0.24 per unit of volatility. If you would invest  38,600  in Per Aarsleff Holding on September 5, 2024 and sell it today you would earn a total of  8,850  from holding Per Aarsleff Holding or generate 22.93% return on investment over 90 days.

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

Royal Unibrew AS  vs.  Per Aarsleff Holding

Royal Unibrew AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Unibrew AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Royal Unibrew is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Per Aarsleff Holding

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Per Aarsleff Holding are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Per Aarsleff sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royal Unibrew and Per Aarsleff

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

The idea behind Royal Unibrew AS and Per Aarsleff Holding 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.