Correlation Between Monarch Services and Oatly Group

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

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

Diversification Opportunities for Monarch Services and Oatly Group

0.0

Correlation Coefficient

Monarch Services  Oatly Group

Pay attention - limited upside

The 3 months correlation between Monarch and Oatly is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Monarch Services 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 Monarch Services 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 Monarch Services 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 Monarch Services i.e., Monarch Services and Oatly Group go up and down completely randomly.

Pair Corralation between Monarch Services and Oatly Group

Given the investment horizon of 90 days Monarch Services is expected to under-perform the Oatly Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Monarch Services is 1.33 times less risky than Oatly Group. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Oatly Group AB is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,260  in Oatly Group AB on December 4, 2024 and sell it today you would lose (3,379) from holding Oatly Group AB or give up 79.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Monarch Services  vs.  Oatly Group AB

Monarch Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monarch Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Monarch Services is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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

Pair Trading with Monarch Services and Oatly Group

The main advantage of trading using opposite Monarch Services and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monarch Services 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 Monarch Services 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 Commodity Directory module to find actively traded commodities issued by global exchanges.