Correlation Between Stagwell and Olam International

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

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

Diversification Opportunities for Stagwell and Olam International

0.0

Correlation Coefficient

Stagwell  Olam International

Pay attention - limited upside

The 3 months correlation between Stagwell and Olam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Olam International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olam International and Stagwell 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 Stagwell are associated (or correlated) with Olam International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olam International has no effect on the direction of Stagwell i.e., Stagwell and Olam International go up and down completely randomly.

Pair Corralation between Stagwell and Olam International

If you would invest  524.00  in Stagwell on March 5, 2024 and sell it today you would earn a total of  169.00  from holding Stagwell or generate 32.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Stagwell  vs.  Olam International Limited

Stagwell

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Stagwell showed solid returns over the last few months and may actually be approaching a breakup point.

Olam International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Stagwell and Olam International

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

The idea behind Stagwell and Olam International Limited 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.