Correlation Between Oatly Group and Siriuspoint

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

Diversification Opportunities for Oatly Group and Siriuspoint

-0.53

Correlation Coefficient

Oatly Group  Siriuspoint

Excellent diversification

The 3 months correlation between Oatly and Siriuspoint is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Oatly Group i.e., Oatly Group and Siriuspoint go up and down completely randomly.

Pair Corralation between Oatly Group and Siriuspoint

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the Siriuspoint. But the stock apears to be less risky and, when comparing its historical volatility, Oatly Group AB is 1.05 times less risky than Siriuspoint. The stock trades about -0.04 of its potential returns per unit of risk. The Siriuspoint is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,548  in Siriuspoint on October 11, 2024 and sell it today you would lose (53.00) from holding Siriuspoint or give up 3.42% of portfolio value over 90 days.

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

Oatly Group AB  vs.  Siriuspoint

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 latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Siriuspoint

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Siriuspoint may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Oatly Group and Siriuspoint

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

The idea behind Oatly Group AB and Siriuspoint 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.