Correlation Between Carlsberg and Kirin Holdings

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

By analyzing existing cross correlation between Carlsberg AS and Kirin Holdings, you can compare the effects of market volatilities on Carlsberg and Kirin Holdings 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 Kirin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and Kirin Holdings.

Diversification Opportunities for Carlsberg and Kirin Holdings

0.74

Correlation Coefficient

Carlsberg  Kirin Holdings

Poor diversification

The 3 months correlation between Carlsberg and Kirin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Kirin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirin Holdings 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 Kirin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirin Holdings has no effect on the direction of Carlsberg i.e., Carlsberg and Kirin Holdings go up and down completely randomly.

Pair Corralation between Carlsberg and Kirin Holdings

Assuming the 90 days trading horizon Carlsberg AS is expected to generate 1.48 times more return on investment than Kirin Holdings. However, Carlsberg is 1.48 times more volatile than Kirin Holdings. It trades about -0.05 of its potential returns per unit of risk. Kirin Holdings is currently generating about -0.09 per unit of risk. If you would invest  11,200  in Carlsberg AS on September 25, 2024 and sell it today you would lose (250.00) from holding Carlsberg AS or give up 2.23% of portfolio value over 90 days.

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

Carlsberg AS  vs.  Kirin Holdings

Carlsberg AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kirin Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kirin Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kirin Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carlsberg and Kirin Holdings

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

The idea behind Carlsberg AS and Kirin 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.