Correlation Between Safety Shot and Oatly Group

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

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

Diversification Opportunities for Safety Shot and Oatly Group

0.75

Correlation Coefficient

Safety Shot  Oatly Group

Poor diversification

The 3 months correlation between Safety and Oatly is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot 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 Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and Oatly Group go up and down completely randomly.

Pair Corralation between Safety Shot and Oatly Group

Given the investment horizon of 90 days Safety Shot is expected to generate 1.48 times more return on investment than Oatly Group. However, Safety Shot is 1.48 times more volatile than Oatly Group AB. It trades about 0.04 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.02 per unit of risk. If you would invest  76.00  in Safety Shot on September 19, 2024 and sell it today you would lose (5.00) from holding Safety Shot or give up 6.58% of portfolio value over 90 days.

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

Safety Shot  vs.  Oatly Group AB

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

Oatly Group AB

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's essential 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 Safety Shot and Oatly Group

The main advantage of trading using opposite Safety Shot and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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 Safety Shot 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.