Correlation Between Oatly Group and Thunder Mountain

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

Diversification Opportunities for Oatly Group and Thunder Mountain

-0.54

Correlation Coefficient

Oatly Group  Thunder Mountain

Excellent diversification

The 3 months correlation between Oatly and Thunder is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Oatly Group AB and Thunder Mountain Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Mountain Gold 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 Thunder Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Mountain Gold has no effect on the direction of Oatly Group i.e., Oatly Group and Thunder Mountain go up and down completely randomly.

Pair Corralation between Oatly Group and Thunder Mountain

Given the investment horizon of 90 days Oatly Group AB is expected to under-perform the Thunder Mountain. But the stock apears to be less risky and, when comparing its historical volatility, Oatly Group AB is 2.36 times less risky than Thunder Mountain. The stock trades about -0.23 of its potential returns per unit of risk. The Thunder Mountain Gold is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5.50  in Thunder Mountain Gold on August 20, 2024 and sell it today you would lose (0.90) from holding Thunder Mountain Gold or give up 16.36% 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.  Thunder Mountain Gold

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 conflicting performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Thunder Mountain Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Mountain Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Thunder Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oatly Group and Thunder Mountain

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

The idea behind Oatly Group AB and Thunder Mountain Gold 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.