Correlation Between Oatly Group and UNITED

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

Diversification Opportunities for Oatly Group and UNITED

0.6

Correlation Coefficient

Oatly Group  UNITED

Poor diversification

The 3 months correlation between Oatly and UNITED is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED TECHNOLOGIES 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of Oatly Group i.e., Oatly Group and UNITED go up and down completely randomly.

Pair Corralation between Oatly Group and UNITED

Given the investment horizon of 90 days Oatly Group AB is expected to generate 1.92 times more return on investment than UNITED. However, Oatly Group is 1.92 times more volatile than UNITED TECHNOLOGIES P. It trades about -0.04 of its potential returns per unit of risk. UNITED TECHNOLOGIES P is currently generating about -0.13 per unit of risk. If you would invest  71.00  in Oatly Group AB on October 11, 2024 and sell it today you would lose (3.00) from holding Oatly Group AB or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	52.38%
Values	Daily Returns

Oatly Group AB  vs.  UNITED TECHNOLOGIES P

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 uncertain 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.

UNITED TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED TECHNOLOGIES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITED is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oatly Group and UNITED

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

The idea behind Oatly Group AB and UNITED TECHNOLOGIES P 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.