Correlation Between Oatly Group and Gladstone Investment

Can any of the company-specific risk be diversified away by investing in both Oatly Group and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment, you can compare the effects of market volatilities on Oatly Group and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oatly Group and Gladstone Investment.

Diversification Opportunities for Oatly Group and Gladstone Investment

-0.39

Correlation Coefficient

Oatly Group  Gladstone Investment

Very good diversification

The 3 months correlation between Oatly and Gladstone is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Oatly Group i.e., Oatly Group and Gladstone Investment go up and down completely randomly.

Pair Corralation between Oatly Group and Gladstone Investment

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the Gladstone Investment. In addition to that, Oatly Group is 14.73 times more volatile than Gladstone Investment. It trades about -0.02 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.06 per unit of volatility. If you would invest  2,442  in Gladstone Investment on October 9, 2024 and sell it today you would earn a total of  26.00  from holding Gladstone Investment or generate 1.06% return on investment over 90 days.

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

Oatly Group AB  vs.  Gladstone Investment

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.

Gladstone Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oatly Group and Gladstone Investment

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

The idea behind Oatly Group AB and Gladstone Investment 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.