Correlation Between Krispy Kreme and Ocado Group

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

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

Diversification Opportunities for Krispy Kreme and Ocado Group

0.59

Correlation Coefficient

Krispy Kreme  Ocado Group

Very weak diversification

The 3 months correlation between Krispy and Ocado is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme i.e., Krispy Kreme and Ocado Group go up and down completely randomly.

Pair Corralation between Krispy Kreme and Ocado Group

Given the investment horizon of 90 days Krispy Kreme is expected to generate 0.61 times more return on investment than Ocado Group. However, Krispy Kreme is 1.65 times less risky than Ocado Group. It trades about -0.13 of its potential returns per unit of risk. Ocado Group plc is currently generating about -0.1 per unit of risk. If you would invest  1,014  in Krispy Kreme on October 10, 2024 and sell it today you would lose (44.00) from holding Krispy Kreme or give up 4.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Krispy Kreme  vs.  Ocado Group plc

Krispy Kreme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Krispy Kreme and Ocado Group

The main advantage of trading using opposite Krispy Kreme and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme 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 Krispy Kreme 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.