Correlation Between Carlsberg Brewery and Pesona Metro

Can any of the company-specific risk be diversified away by investing in both Carlsberg Brewery and Pesona Metro 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 Pesona Metro 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 Pesona Metro Holdings, you can compare the effects of market volatilities on Carlsberg Brewery and Pesona Metro 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 Pesona Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg Brewery and Pesona Metro.

Diversification Opportunities for Carlsberg Brewery and Pesona Metro

0.66

Correlation Coefficient

Carlsberg Brewery  Pesona Metro

Poor diversification

The 3 months correlation between Carlsberg and Pesona is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg Brewery Malaysia and Pesona Metro Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pesona Metro Holdings 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 Pesona Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pesona Metro Holdings has no effect on the direction of Carlsberg Brewery i.e., Carlsberg Brewery and Pesona Metro go up and down completely randomly.

Pair Corralation between Carlsberg Brewery and Pesona Metro

Assuming the 90 days trading horizon Carlsberg Brewery is expected to generate 2.63 times less return on investment than Pesona Metro. But when comparing it to its historical volatility, Carlsberg Brewery Malaysia is 3.28 times less risky than Pesona Metro. It trades about 0.1 of its potential returns per unit of risk. Pesona Metro Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Pesona Metro Holdings on September 29, 2024 and sell it today you would earn a total of  7.00  from holding Pesona Metro Holdings or generate 29.17% return on investment over 90 days.

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

Carlsberg Brewery Malaysia  vs.  Pesona Metro Holdings

Carlsberg Brewery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg Brewery Malaysia are ranked lower than 9 (%) 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.

Pesona Metro Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pesona Metro Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pesona Metro disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carlsberg Brewery and Pesona Metro

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

The idea behind Carlsberg Brewery Malaysia and Pesona Metro Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.