Correlation Between Carlsberg and HH International
Can any of the company-specific risk be diversified away by investing in both Carlsberg and HH International 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 and HH International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and HH International AS, you can compare the effects of market volatilities on Carlsberg and HH International 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 with a short position of HH International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and HH International.
Diversification Opportunities for Carlsberg and HH International
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Carlsberg and HH International is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and HH International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HH International and Carlsberg 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 AS are associated (or correlated) with HH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HH International has no effect on the direction of Carlsberg i.e., Carlsberg and HH International go up and down completely randomly.
Pair Corralation between Carlsberg and HH International
Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the HH International. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.18 times less risky than HH International. The stock trades about -0.02 of its potential returns per unit of risk. The HH International AS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 10,340 in HH International AS on September 6, 2024 and sell it today you would lose (2,570) from holding HH International AS or give up 24.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Carlsberg AS vs. HH International AS
Performance |
Timeline |
Carlsberg AS |
HH International |
Carlsberg and HH International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carlsberg and HH International
The main advantage of trading using opposite Carlsberg and HH International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg position performs unexpectedly, HH International 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 HH International will offset losses from the drop in HH International's long position.Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg AS |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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