Correlation Between Oatly Group and Ares Acquisition

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

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

Diversification Opportunities for Oatly Group and Ares Acquisition

-0.76

Correlation Coefficient

Oatly Group  Ares Acquisition

Pay attention - limited upside

The 3 months correlation between Oatly and Ares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and Ares Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Acquisition and Oatly 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 Oatly Group AB are associated (or correlated) with Ares Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Acquisition has no effect on the direction of Oatly Group i.e., Oatly Group and Ares Acquisition go up and down completely randomly.

Pair Corralation between Oatly Group and Ares Acquisition

Given the investment horizon of 90 days Oatly Group AB is expected to generate 35.18 times more return on investment than Ares Acquisition. However, Oatly Group is 35.18 times more volatile than Ares Acquisition. It trades about 0.12 of its potential returns per unit of risk. Ares Acquisition is currently generating about 0.19 per unit of risk. If you would invest  71.00  in Oatly Group AB on October 8, 2024 and sell it today you would earn a total of  5.00  from holding Oatly Group AB or generate 7.04% return on investment over 90 days.

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

Oatly Group AB  vs.  Ares Acquisition

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 fairly strong essential indicators, Oatly Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Ares Acquisition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ares Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Oatly Group and Ares Acquisition

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

The idea behind Oatly Group AB and Ares Acquisition 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.