Correlation Between Kroger and Kesko Oyj

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

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

Diversification Opportunities for Kroger and Kesko Oyj

0.19

Correlation Coefficient

Kroger  Kesko Oyj

Average diversification

The 3 months correlation between Kroger and Kesko is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Kesko Oyj ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesko Oyj ADR and Kroger 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 Kroger Company are associated (or correlated) with Kesko Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesko Oyj ADR has no effect on the direction of Kroger i.e., Kroger and Kesko Oyj go up and down completely randomly.

Pair Corralation between Kroger and Kesko Oyj

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 1.23 times more return on investment than Kesko Oyj. However, Kroger is 1.23 times more volatile than Kesko Oyj ADR. It trades about 0.37 of its potential returns per unit of risk. Kesko Oyj ADR is currently generating about -0.25 per unit of risk. If you would invest  5,547  in Kroger Company on September 1, 2024 and sell it today you would earn a total of  561.00  from holding Kroger Company or generate 10.11% return on investment over 90 days.

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

Kroger Company  vs.  Kesko Oyj ADR

Kroger Company

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Kroger reported solid returns over the last few months and may actually be approaching a breakup point.

Kesko Oyj ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kesko Oyj ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kesko Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Kesko Oyj

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

The idea behind Kroger Company and Kesko Oyj ADR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.