Correlation Between Kesko Oyj and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both Kesko Oyj and Tesco PLC 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 Tesco PLC 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 Tesco PLC, you can compare the effects of market volatilities on Kesko Oyj and Tesco PLC 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 Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and Tesco PLC.
Diversification Opportunities for Kesko Oyj and Tesco PLC
Good diversification
The 3 months correlation between Kesko and Tesco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj ADR and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco PLC 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 Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Tesco PLC go up and down completely randomly.
Pair Corralation between Kesko Oyj and Tesco PLC
Assuming the 90 days horizon Kesko Oyj ADR is expected to generate 2.11 times more return on investment than Tesco PLC. However, Kesko Oyj is 2.11 times more volatile than Tesco PLC. It trades about 0.09 of its potential returns per unit of risk. Tesco PLC is currently generating about -0.15 per unit of risk. If you would invest 959.00 in Kesko Oyj ADR on August 28, 2024 and sell it today you would earn a total of 40.00 from holding Kesko Oyj ADR or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kesko Oyj ADR vs. Tesco PLC
Performance |
| Timeline |
| Kesko Oyj ADR |
| Tesco PLC |
Kesko Oyj and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesko Oyj and Tesco PLC
The main advantage of trading using opposite Kesko Oyj and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko Oyj position performs unexpectedly, Tesco PLC 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 Tesco PLC will offset losses from the drop in Tesco PLC'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 |
| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Dairy Farm International | Tesco PLC vs. Woolworths Group Limited | Tesco PLC vs. Kesko Oyj ADR |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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