Correlation Between Kraft Heinz and Transocean

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

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

Diversification Opportunities for Kraft Heinz and Transocean

-0.18

Correlation Coefficient

Kraft Heinz  Transocean

Good diversification

The 3 months correlation between Kraft and Transocean is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean and Kraft Heinz 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 Kraft Heinz Co are associated (or correlated) with Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and Transocean go up and down completely randomly.

Pair Corralation between Kraft Heinz and Transocean

Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the Transocean. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 2.44 times less risky than Transocean. The stock trades about -0.02 of its potential returns per unit of risk. The Transocean is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Transocean on May 5, 2025 and sell it today you would earn a total of  52.00  from holding Transocean or generate 22.61% return on investment over 90 days.

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

Kraft Heinz Co  vs.  Transocean

Kraft Heinz

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kraft Heinz Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Kraft Heinz is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Transocean

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transocean are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Transocean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraft Heinz and Transocean

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

The idea behind Kraft Heinz Co and Transocean 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.