Correlation Between Carlsberg and HH International

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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 generate 1.25 times more return on investment than HH International. However, Carlsberg is 1.25 times more volatile than HH International AS. It trades about -0.13 of its potential returns per unit of risk. HH International AS is currently generating about -0.2 per unit of risk. If you would invest  104,500  in Carlsberg AS on September 6, 2024 and sell it today you would lose (15,100) from holding Carlsberg AS or give up 14.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Carlsberg AS  vs.  HH International AS

 Performance 
       Timeline  
Carlsberg AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
HH International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HH International AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.
The idea behind Carlsberg AS and HH International 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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