Correlation Between Boston Beer and Carlsberg A/S

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

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

Diversification Opportunities for Boston Beer and Carlsberg A/S

-0.57

Correlation Coefficient

Boston Beer  Carlsberg A/S

Excellent diversification

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

Pair Corralation between Boston Beer and Carlsberg A/S

Considering the 90-day investment horizon Boston Beer is expected to under-perform the Carlsberg A/S. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 1.48 times less risky than Carlsberg A/S. The stock trades about -0.23 of its potential returns per unit of risk. The Carlsberg AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,925  in Carlsberg AS on December 2, 2024 and sell it today you would earn a total of  1,487  from holding Carlsberg AS or generate 13.61% return on investment over 90 days.

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

Boston Beer  vs.  Carlsberg AS

Boston Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Beer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Carlsberg A/S

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Carlsberg A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boston Beer and Carlsberg A/S

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

The idea behind Boston Beer 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.