Correlation Between Carlsberg Brewery and Mr D

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

By analyzing existing cross correlation between Carlsberg Brewery Malaysia and Mr D I, you can compare the effects of market volatilities on Carlsberg Brewery and Mr D 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 Carlsberg Brewery with a short position of Mr D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg Brewery and Mr D.

Diversification Opportunities for Carlsberg Brewery and Mr D

-0.83

Correlation Coefficient

Carlsberg Brewery  Mr D

Pay attention - limited upside

The 3 months correlation between Carlsberg and 5296 is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and Mr D I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr D I and Carlsberg Brewery 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 Carlsberg Brewery Malaysia are associated (or correlated) with Mr D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr D I has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and Mr D go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and Mr D

Assuming the 90 days trading horizon Carlsberg Brewery Malaysia is expected to generate 0.44 times more return on investment than Mr D. However, Carlsberg Brewery Malaysia is 2.25 times less risky than Mr D. It trades about 0.17 of its potential returns per unit of risk. Mr D I is currently generating about -0.09 per unit of risk. If you would invest  2,037  in Carlsberg Brewery Malaysia on September 25, 2024 and sell it today you would earn a total of  43.00  from holding Carlsberg Brewery Malaysia or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Carlsberg Brewery Malaysia  vs.  Mr D I

Carlsberg Brewery

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Carlsberg Brewery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mr D I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mr D I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Carlsberg Brewery and Mr D

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

The idea behind Carlsberg Brewery Malaysia and Mr D I 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.