Correlation Between Kesko Oyj and Weis Markets

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

Diversification Opportunities for Kesko Oyj and Weis Markets

0.2

Correlation Coefficient

Kesko Oyj  Weis Markets

Modest diversification

The 3 months correlation between Kesko and Weis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj ADR and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets 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 Weis Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weis Markets has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Weis Markets go up and down completely randomly.

Pair Corralation between Kesko Oyj and Weis Markets

Assuming the 90 days horizon Kesko Oyj ADR is expected to under-perform the Weis Markets. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kesko Oyj ADR is 1.17 times less risky than Weis Markets. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Weis Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,772  in Weis Markets on August 31, 2024 and sell it today you would earn a total of  507.00  from holding Weis Markets or generate 7.49% return on investment over 90 days.

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

Kesko Oyj ADR  vs.  Weis Markets

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.

Weis Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Weis Markets may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Kesko Oyj and Weis Markets

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

The idea behind Kesko Oyj ADR and Weis Markets 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.