Correlation Between Koninklijke Ahold and Ocado Group

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

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

Diversification Opportunities for Koninklijke Ahold and Ocado Group

-0.64

Correlation Coefficient

Koninklijke Ahold  Ocado Group

Excellent diversification

The 3 months correlation between Koninklijke and Ocado is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold Delhaize 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 Koninklijke Ahold 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 Koninklijke Ahold Delhaize 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 Koninklijke Ahold i.e., Koninklijke Ahold and Ocado Group go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Ocado Group

If you would invest  3,466  in Koninklijke Ahold Delhaize on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Koninklijke Ahold Delhaize or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Koninklijke Ahold Delhaize  vs.  Ocado Group plc

Koninklijke Ahold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Ahold Delhaize has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Koninklijke Ahold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the 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 latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Koninklijke Ahold and Ocado Group

The main advantage of trading using opposite Koninklijke Ahold and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Ahold 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 Koninklijke Ahold Delhaize 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.