Correlation Between Kesko Oyj and Ocado Group

Can any of the company-specific risk be diversified away by investing in both Kesko Oyj and Ocado 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 Kesko Oyj and Ocado Group 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 Ocado Group PLC, you can compare the effects of market volatilities on Kesko Oyj and Ocado 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 Kesko Oyj with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and Ocado Group.

Diversification Opportunities for Kesko Oyj and Ocado Group

0.16

Correlation Coefficient

Kesko Oyj  Ocado Group

Average diversification

The 3 months correlation between Kesko and Ocado is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj ADR and Ocado Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group 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 Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group PLC has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Ocado Group go up and down completely randomly.

Pair Corralation between Kesko Oyj and Ocado Group

Assuming the 90 days horizon Kesko Oyj ADR is expected to generate 0.56 times more return on investment than Ocado Group. However, Kesko Oyj ADR is 1.8 times less risky than Ocado Group. It trades about 0.01 of its potential returns per unit of risk. Ocado Group PLC is currently generating about -0.07 per unit of risk. If you would invest  1,004  in Kesko Oyj ADR on September 2, 2024 and sell it today you would lose (2.00) from holding Kesko Oyj ADR or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kesko Oyj ADR  vs.  Ocado Group PLC

Kesko Oyj ADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ocado Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocado Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kesko Oyj and Ocado Group

The main advantage of trading using opposite Kesko Oyj and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko Oyj position performs unexpectedly, Ocado 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 Ocado Group will offset losses from the drop in Ocado Group's long position.

The idea behind Kesko Oyj ADR and Ocado Group PLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.