Correlation Between Nordea Bank and Carlsberg

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

By analyzing existing cross correlation between Nordea Bank Abp and Carlsberg AS, you can compare the effects of market volatilities on Nordea Bank and Carlsberg 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 Nordea Bank with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Carlsberg.

Diversification Opportunities for Nordea Bank and Carlsberg

-0.37

Correlation Coefficient

Nordea Bank  Carlsberg

Very good diversification

The 3 months correlation between Nordea and Carlsberg is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with Carlsberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlsberg AS has no effect on the direction of Nordea Bank i.e., Nordea Bank and Carlsberg go up and down completely randomly.

Pair Corralation between Nordea Bank and Carlsberg

Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.73 times more return on investment than Carlsberg. However, Nordea Bank Abp is 1.38 times less risky than Carlsberg. It trades about 0.02 of its potential returns per unit of risk. Carlsberg AS is currently generating about -0.18 per unit of risk. If you would invest  7,896  in Nordea Bank Abp on September 3, 2024 and sell it today you would earn a total of  92.00  from holding Nordea Bank Abp or generate 1.17% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Carlsberg AS

Nordea Bank Abp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nordea Bank is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 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.

Pair Trading with Nordea Bank and Carlsberg

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

The idea behind Nordea Bank Abp and Carlsberg 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.