Correlation Between Transportadora and Oatly Group

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

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

Diversification Opportunities for Transportadora and Oatly Group

-0.83

Correlation Coefficient

Transportadora  Oatly Group

Pay attention - limited upside

The 3 months correlation between Transportadora and Oatly is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas 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 Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Oatly Group go up and down completely randomly.

Pair Corralation between Transportadora and Oatly Group

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 0.69 times more return on investment than Oatly Group. However, Transportadora de Gas is 1.46 times less risky than Oatly Group. It trades about -0.01 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.24 per unit of risk. If you would invest  2,904  in Transportadora de Gas on September 26, 2024 and sell it today you would lose (29.00) from holding Transportadora de Gas or give up 1.0% of portfolio value over 90 days.

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

Transportadora de Gas  vs.  Oatly Group AB

Transportadora de Gas

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 fragile 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 Transportadora and Oatly Group

The main advantage of trading using opposite Transportadora and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.