Correlation Between Carlsberg and Tsingtao Brewery

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

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

Diversification Opportunities for Carlsberg and Tsingtao Brewery

0.11

Correlation Coefficient

Carlsberg  Tsingtao Brewery

Average diversification

The 3 months correlation between Carlsberg and Tsingtao is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS and Tsingtao Brewery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Carlsberg i.e., Carlsberg and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between Carlsberg and Tsingtao Brewery

Assuming the 90 days horizon Carlsberg AS is expected to under-perform the Tsingtao Brewery. But the pink sheet apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 2.05 times less risky than Tsingtao Brewery. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Tsingtao Brewery Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,439  in Tsingtao Brewery Co on May 6, 2025 and sell it today you would lose (246.00) from holding Tsingtao Brewery Co or give up 7.15% of portfolio value over 90 days.

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

Carlsberg AS  vs.  Tsingtao Brewery Co

Carlsberg AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlsberg AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tsingtao Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tsingtao Brewery Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tsingtao Brewery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Carlsberg and Tsingtao Brewery

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

The idea behind Carlsberg AS and Tsingtao Brewery Co 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.