Correlation Between Ocado Group and Carrefour

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

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

Diversification Opportunities for Ocado Group and Carrefour

0.24

Correlation Coefficient

Ocado Group  Carrefour

Modest diversification

The 3 months correlation between Ocado and Carrefour is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group PLC and Carrefour SA PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA PK and Ocado Group 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 Ocado Group PLC are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA PK has no effect on the direction of Ocado Group i.e., Ocado Group and Carrefour go up and down completely randomly.

Pair Corralation between Ocado Group and Carrefour

Assuming the 90 days horizon Ocado Group PLC is expected to generate 2.49 times more return on investment than Carrefour. However, Ocado Group is 2.49 times more volatile than Carrefour SA PK. It trades about 0.04 of its potential returns per unit of risk. Carrefour SA PK is currently generating about 0.02 per unit of risk. If you would invest  361.00  in Ocado Group PLC on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Ocado Group PLC or generate 6.09% return on investment over 90 days.

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

Ocado Group PLC  vs.  Carrefour SA PK

Ocado Group PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ocado Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Ocado Group reported solid returns over the last few months and may actually be approaching a breakup point.

Carrefour SA PK

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carrefour SA PK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Carrefour is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ocado Group and Carrefour

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

The idea behind Ocado Group PLC and Carrefour SA PK 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.