Correlation Between Gentex and Oatly Group

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Can any of the company-specific risk be diversified away by investing in both Gentex and Oatly Group 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 Gentex and Oatly Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Oatly Group AB, you can compare the effects of market volatilities on Gentex and Oatly Group 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 Gentex with a short position of Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Oatly Group.

Diversification Opportunities for Gentex and Oatly Group

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Gentex and Oatly is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB and Gentex 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 Gentex are associated (or correlated) with Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Gentex i.e., Gentex and Oatly Group go up and down completely randomly.

Pair Corralation between Gentex and Oatly Group

Given the investment horizon of 90 days Gentex is expected to generate 0.26 times more return on investment than Oatly Group. However, Gentex is 3.83 times less risky than Oatly Group. It trades about 0.02 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.03 per unit of risk. If you would invest  2,742  in Gentex on September 26, 2024 and sell it today you would earn a total of  171.00  from holding Gentex or generate 6.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gentex  vs.  Oatly Group AB

 Performance 
       Timeline  
Gentex 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly 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.

Gentex and Oatly Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gentex and Oatly Group

The main advantage of trading using opposite Gentex and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, Oatly Group 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 Oatly Group will offset losses from the drop in Oatly Group's long position.
The idea behind Gentex and Oatly Group AB 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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