Correlation Between Contango ORE and Oatly Group

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

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

Diversification Opportunities for Contango ORE and Oatly Group

0.73

Correlation Coefficient

Contango ORE  Oatly Group

Poor diversification

The 3 months correlation between Contango and Oatly is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE 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 Contango ORE 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 Contango ORE 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 Contango ORE i.e., Contango ORE and Oatly Group go up and down completely randomly.

Pair Corralation between Contango ORE and Oatly Group

Given the investment horizon of 90 days Contango ORE is expected to under-perform the Oatly Group. But the stock apears to be less risky and, when comparing its historical volatility, Contango ORE is 1.06 times less risky than Oatly Group. The stock trades about -0.21 of its potential returns per unit of risk. The Oatly Group AB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Oatly Group AB on October 11, 2024 and sell it today you would lose (3.00) from holding Oatly Group AB or give up 4.23% of portfolio value over 90 days.

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

Contango ORE  vs.  Oatly Group AB

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 latest uncertain performance, the Stock's essential 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 Contango ORE and Oatly Group

The main advantage of trading using opposite Contango ORE and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE 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 Contango ORE 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.