Correlation Between Alico and Kesko Oyj
Can any of the company-specific risk be diversified away by investing in both Alico and Kesko Oyj 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 Alico and Kesko Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alico Inc and Kesko Oyj ADR, you can compare the effects of market volatilities on Alico and Kesko Oyj 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 Alico with a short position of Kesko Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alico and Kesko Oyj.
Diversification Opportunities for Alico and Kesko Oyj
Excellent diversification
The 3 months correlation between Alico and Kesko is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Kesko Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesko Oyj ADR and Alico 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 Alico Inc are associated (or correlated) with Kesko Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesko Oyj ADR has no effect on the direction of Alico i.e., Alico and Kesko Oyj go up and down completely randomly.
Pair Corralation between Alico and Kesko Oyj
Given the investment horizon of 90 days Alico Inc is expected to generate 3.23 times more return on investment than Kesko Oyj. However, Alico is 3.23 times more volatile than Kesko Oyj ADR. It trades about 0.21 of its potential returns per unit of risk. Kesko Oyj ADR is currently generating about 0.04 per unit of risk. If you would invest 2,590 in Alico Inc on November 3, 2024 and sell it today you would earn a total of 542.00 from holding Alico Inc or generate 20.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alico Inc vs. Kesko Oyj ADR
Performance |
| Timeline |
| Alico Inc |
| Kesko Oyj ADR |
Alico and Kesko Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alico and Kesko Oyj
The main advantage of trading using opposite Alico and Kesko Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alico position performs unexpectedly, Kesko Oyj 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 Kesko Oyj will offset losses from the drop in Kesko Oyj's long position.The idea behind Alico Inc and Kesko Oyj ADR 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.| Kesko Oyj vs. Carrefour SA PK | Kesko Oyj vs. J Sainsbury plc | Kesko Oyj vs. Om Holdings International | Kesko Oyj vs. J Sainsbury PLC |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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