Correlation Between Flow Beverage and Oatly Group

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

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

Diversification Opportunities for Flow Beverage and Oatly Group

0.47

Correlation Coefficient

Flow Beverage  Oatly Group

Very weak diversification

The 3 months correlation between Flow and Oatly is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Flow Beverage Corp 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 Flow Beverage 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 Flow Beverage Corp 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 Flow Beverage i.e., Flow Beverage and Oatly Group go up and down completely randomly.

Pair Corralation between Flow Beverage and Oatly Group

Assuming the 90 days horizon Flow Beverage Corp is expected to generate 1.38 times more return on investment than Oatly Group. However, Flow Beverage is 1.38 times more volatile than Oatly Group AB. It trades about 0.0 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.03 per unit of risk. If you would invest  35.00  in Flow Beverage Corp on September 12, 2024 and sell it today you would lose (23.00) from holding Flow Beverage Corp or give up 65.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.72%
Values	Daily Returns

Flow Beverage Corp  vs.  Oatly Group AB

Flow Beverage Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Beverage Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Flow Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Flow Beverage and Oatly Group

The main advantage of trading using opposite Flow Beverage and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Beverage 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 Flow Beverage Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.