Correlation Between Maison Solutions and Ocado Group

Can any of the company-specific risk be diversified away by investing in both Maison Solutions 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 Maison Solutions and Ocado Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maison Solutions and Ocado Group plc, you can compare the effects of market volatilities on Maison Solutions 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 Maison Solutions with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maison Solutions and Ocado Group.

Diversification Opportunities for Maison Solutions and Ocado Group

0.6

Correlation Coefficient

Maison Solutions  Ocado Group

Poor diversification

The 3 months correlation between Maison and Ocado is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Maison Solutions 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 Maison Solutions 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 Maison Solutions 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 Maison Solutions i.e., Maison Solutions and Ocado Group go up and down completely randomly.

Pair Corralation between Maison Solutions and Ocado Group

Considering the 90-day investment horizon Maison Solutions is expected to generate 2.12 times more return on investment than Ocado Group. However, Maison Solutions is 2.12 times more volatile than Ocado Group plc. It trades about -0.05 of its potential returns per unit of risk. Ocado Group plc is currently generating about -0.2 per unit of risk. If you would invest  142.00  in Maison Solutions on September 27, 2024 and sell it today you would lose (31.00) from holding Maison Solutions or give up 21.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Maison Solutions  vs.  Ocado Group plc

Maison Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maison Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Maison Solutions and Ocado Group

The main advantage of trading using opposite Maison Solutions and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maison Solutions 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 Maison Solutions 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.