Correlation Between Kesko Oyj and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Kesko Oyj and Dairy Farm 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 Kesko Oyj and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kesko Oyj ADR and Dairy Farm International, you can compare the effects of market volatilities on Kesko Oyj and Dairy Farm 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 Kesko Oyj with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and Dairy Farm.
Diversification Opportunities for Kesko Oyj and Dairy Farm
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kesko and Dairy is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj ADR and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and Kesko Oyj 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 Kesko Oyj ADR are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Dairy Farm go up and down completely randomly.
Pair Corralation between Kesko Oyj and Dairy Farm
Assuming the 90 days horizon Kesko Oyj ADR is expected to under-perform the Dairy Farm. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kesko Oyj ADR is 1.01 times less risky than Dairy Farm. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Dairy Farm International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Dairy Farm International on August 28, 2024 and sell it today you would earn a total of 27.00 from holding Dairy Farm International or generate 14.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Kesko Oyj ADR vs. Dairy Farm International
Performance |
| Timeline |
| Kesko Oyj ADR |
| Dairy Farm International |
Kesko Oyj and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesko Oyj and Dairy Farm
The main advantage of trading using opposite Kesko Oyj and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko Oyj position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Kesko Oyj vs. Natural Grocers by | Kesko Oyj vs. Grocery Outlet Holding | Kesko Oyj vs. Village Super Market | Kesko Oyj vs. Ingles Markets Incorporated |
| Dairy Farm vs. Natural Grocers by | Dairy Farm vs. Grocery Outlet Holding | Dairy Farm vs. Village Super Market | Dairy Farm vs. Ingles Markets Incorporated |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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