Correlation Between Ares Acquisition and Oatly Group

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

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

Diversification Opportunities for Ares Acquisition and Oatly Group

-0.76

Correlation Coefficient

Ares Acquisition  Oatly Group

Pay attention - limited upside

The 3 months correlation between Ares and Oatly is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ares Acquisition 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 Ares Acquisition 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 Ares Acquisition 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 Ares Acquisition i.e., Ares Acquisition and Oatly Group go up and down completely randomly.

Pair Corralation between Ares Acquisition and Oatly Group

Given the investment horizon of 90 days Ares Acquisition is expected to generate 21.51 times less return on investment than Oatly Group. But when comparing it to its historical volatility, Ares Acquisition is 35.18 times less risky than Oatly Group. It trades about 0.19 of its potential returns per unit of risk. Oatly Group AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Oatly Group AB on October 8, 2024 and sell it today you would earn a total of  5.00  from holding Oatly Group AB or generate 7.04% return on investment over 90 days.

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

Ares Acquisition  vs.  Oatly Group AB

Ares Acquisition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the 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 fairly strong essential indicators, Oatly Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ares Acquisition and Oatly Group

The main advantage of trading using opposite Ares Acquisition and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Acquisition 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 Ares Acquisition 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.