Correlation Between Kesko Oyj and Natural Grocers

Can any of the company-specific risk be diversified away by investing in both Kesko Oyj and Natural Grocers 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 Kesko Oyj and Natural Grocers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kesko Oyj ADR and Natural Grocers by, you can compare the effects of market volatilities on Kesko Oyj and Natural Grocers 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 Kesko Oyj with a short position of Natural Grocers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and Natural Grocers.

Diversification Opportunities for Kesko Oyj and Natural Grocers

-0.58

Correlation Coefficient

Kesko Oyj  Natural Grocers

Excellent diversification

The 3 months correlation between Kesko and Natural is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj ADR and Natural Grocers by in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Grocers by and Kesko Oyj 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 Kesko Oyj ADR are associated (or correlated) with Natural Grocers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Grocers by has no effect on the direction of Kesko Oyj i.e., Kesko Oyj and Natural Grocers go up and down completely randomly.

Pair Corralation between Kesko Oyj and Natural Grocers

Assuming the 90 days horizon Kesko Oyj ADR is expected to generate 0.44 times more return on investment than Natural Grocers. However, Kesko Oyj ADR is 2.29 times less risky than Natural Grocers. It trades about 0.11 of its potential returns per unit of risk. Natural Grocers by is currently generating about 0.0 per unit of risk. If you would invest  932.00  in Kesko Oyj ADR on December 29, 2024 and sell it today you would earn a total of  86.00  from holding Kesko Oyj ADR or generate 9.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Kesko Oyj ADR  vs.  Natural Grocers by

Kesko Oyj ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kesko Oyj ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Kesko Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Natural Grocers by

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natural Grocers by has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Natural Grocers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kesko Oyj and Natural Grocers

The main advantage of trading using opposite Kesko Oyj and Natural Grocers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko Oyj position performs unexpectedly, Natural Grocers 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 Natural Grocers will offset losses from the drop in Natural Grocers' long position.

The idea behind Kesko Oyj ADR and Natural Grocers by 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.