Correlation Between Crimson Wine and Oatly Group

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

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

Diversification Opportunities for Crimson Wine and Oatly Group

0.69

Correlation Coefficient

Crimson Wine  Oatly Group

Poor diversification

The 3 months correlation between Crimson and Oatly is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine 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 Crimson Wine 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 Crimson Wine 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 Crimson Wine i.e., Crimson Wine and Oatly Group go up and down completely randomly.

Pair Corralation between Crimson Wine and Oatly Group

Given the investment horizon of 90 days Crimson Wine is expected to under-perform the Oatly Group. But the otc stock apears to be less risky and, when comparing its historical volatility, Crimson Wine is 7.49 times less risky than Oatly Group. The otc stock trades about -0.14 of its potential returns per unit of risk. The Oatly Group AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,220  in Oatly Group AB on December 20, 2024 and sell it today you would lose (266.00) from holding Oatly Group AB or give up 21.8% of portfolio value over 90 days.

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

Crimson Wine  vs.  Oatly Group AB

Crimson Wine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crimson Wine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Oatly Group AB

Risk-Adjusted Performance

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 Crimson Wine and Oatly Group

The main advantage of trading using opposite Crimson Wine and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crimson Wine 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 Crimson Wine 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.