Correlation Between Carlsberg and Molson Coors

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

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

Diversification Opportunities for Carlsberg and Molson Coors

-0.31

Correlation Coefficient

Carlsberg  Molson Coors

Very good diversification

The 3 months correlation between Carlsberg and Molson is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Carlsberg i.e., Carlsberg and Molson Coors go up and down completely randomly.

Pair Corralation between Carlsberg and Molson Coors

Assuming the 90 days horizon Carlsberg AS is expected to generate 0.89 times more return on investment than Molson Coors. However, Carlsberg AS is 1.13 times less risky than Molson Coors. It trades about 0.03 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about 0.02 per unit of risk. If you would invest  2,403  in Carlsberg AS on February 20, 2024 and sell it today you would earn a total of  472.00  from holding Carlsberg AS or generate 19.64% return on investment over 90 days.

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

Carlsberg AS  vs.  Molson Coors Brewing

Carlsberg AS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carlsberg AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Carlsberg may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Molson Coors Brewing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molson Coors Brewing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Carlsberg and Molson Coors

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

The idea behind Carlsberg AS and Molson Coors Brewing 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.