Correlation Between Tesla and Carlsberg
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Carlsberg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Carlsberg AS, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Carlsberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Carlsberg.
Diversification Opportunities for Tesla and Carlsberg
Poor diversification
The 3 months correlation between Tesla and Carlsberg is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Carlsberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlsberg AS and Tesla 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 Tesla Inc 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 Tesla i.e., Tesla and Carlsberg go up and down completely randomly.
Pair Corralation between Tesla and Carlsberg
Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Carlsberg. In addition to that, Tesla is 2.29 times more volatile than Carlsberg AS. It trades about -0.16 of its total potential returns per unit of risk. Carlsberg AS is currently generating about -0.05 per unit of volatility. If you would invest 112,000 in Carlsberg AS on January 19, 2024 and sell it today you would lose (1,500) from holding Carlsberg AS or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Tesla Inc vs. Carlsberg AS
Performance |
| Timeline |
| Tesla Inc |
| Carlsberg AS |
Tesla and Carlsberg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Carlsberg
The main advantage of trading using opposite Tesla and Carlsberg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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 Tesla Inc 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.| Carlsberg vs. AP Mller | Carlsberg vs. ROCKWOOL International AS | Carlsberg vs. Royal Unibrew AS | Carlsberg vs. Tryg AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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