Correlation Between Aryzta AG and Kraft Heinz

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

By analyzing existing cross correlation between Aryzta AG PK and Kraft Heinz Co, you can compare the effects of market volatilities on Aryzta AG and Kraft Heinz 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 Aryzta AG with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aryzta AG and Kraft Heinz.

Diversification Opportunities for Aryzta AG and Kraft Heinz

0.45

Correlation Coefficient

Aryzta AG  Kraft Heinz

Very weak diversification

The 3 months correlation between Aryzta and Kraft is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aryzta AG PK and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Aryzta AG 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 Aryzta AG PK are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Aryzta AG i.e., Aryzta AG and Kraft Heinz go up and down completely randomly.

Pair Corralation between Aryzta AG and Kraft Heinz

Assuming the 90 days horizon Aryzta AG is expected to generate 1.67 times less return on investment than Kraft Heinz. In addition to that, Aryzta AG is 1.85 times more volatile than Kraft Heinz Co. It trades about 0.07 of its total potential returns per unit of risk. Kraft Heinz Co is currently generating about 0.23 per unit of volatility. If you would invest  3,706  in Kraft Heinz Co on January 31, 2024 and sell it today you would earn a total of  159.00  from holding Kraft Heinz Co or generate 4.29% return on investment over 90 days.

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

Aryzta AG PK  vs.  Kraft Heinz Co

Aryzta AG PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aryzta AG PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aryzta AG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kraft Heinz

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kraft Heinz Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Kraft Heinz is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aryzta AG and Kraft Heinz

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

The idea behind Aryzta AG PK and Kraft Heinz Co 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 Anywhere module to track or share privately all of your investments from the convenience of any device.