Correlation Between 404280DG1 and Oatly Group

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Can any of the company-specific risk be diversified away by investing in both 404280DG1 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 404280DG1 and Oatly Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC 521 11 AUG 28 and Oatly Group AB, you can compare the effects of market volatilities on 404280DG1 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 404280DG1 with a short position of Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of 404280DG1 and Oatly Group.

Diversification Opportunities for 404280DG1 and Oatly Group

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between 404280DG1 and Oatly is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding HSBC 521 11 AUG 28 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 404280DG1 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 HSBC 521 11 AUG 28 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 404280DG1 i.e., 404280DG1 and Oatly Group go up and down completely randomly.

Pair Corralation between 404280DG1 and Oatly Group

Assuming the 90 days trading horizon HSBC 521 11 AUG 28 is expected to under-perform the Oatly Group. But the bond apears to be less risky and, when comparing its historical volatility, HSBC 521 11 AUG 28 is 5.02 times less risky than Oatly Group. The bond trades about -0.3 of its potential returns per unit of risk. The Oatly Group AB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  81.00  in Oatly Group AB on August 28, 2024 and sell it today you would lose (7.00) from holding Oatly Group AB or give up 8.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

HSBC 521 11 AUG 28  vs.  Oatly Group AB

 Performance 
       Timeline  
HSBC 521 11 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HSBC 521 11 AUG 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HSBC 521 11 AUG 28 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 weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

404280DG1 and Oatly Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 404280DG1 and Oatly Group

The main advantage of trading using opposite 404280DG1 and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 404280DG1 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 HSBC 521 11 AUG 28 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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