Correlation Between Crimson Wine and Becle SA

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

By analyzing existing cross correlation between Crimson Wine and Becle SA de, you can compare the effects of market volatilities on Crimson Wine and Becle SA 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 Crimson Wine with a short position of Becle SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crimson Wine and Becle SA.

Diversification Opportunities for Crimson Wine and Becle SA

-0.23

Correlation Coefficient

Crimson Wine  Becle SA

Very good diversification

The 3 months correlation between Crimson and Becle is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Crimson Wine and Becle SA de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becle SA de and Crimson Wine 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 Crimson Wine are associated (or correlated) with Becle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becle SA de has no effect on the direction of Crimson Wine i.e., Crimson Wine and Becle SA go up and down completely randomly.

Pair Corralation between Crimson Wine and Becle SA

Given the investment horizon of 90 days Crimson Wine is expected to generate 0.58 times more return on investment than Becle SA. However, Crimson Wine is 1.72 times less risky than Becle SA. It trades about 0.04 of its potential returns per unit of risk. Becle SA de is currently generating about -0.09 per unit of risk. If you would invest  592.00  in Crimson Wine on September 23, 2024 and sell it today you would earn a total of  54.00  from holding Crimson Wine or generate 9.12% return on investment over 90 days.

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

Crimson Wine  vs.  Becle SA de

Crimson Wine

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crimson Wine are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Crimson Wine is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Becle SA de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Becle SA de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Crimson Wine and Becle SA

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

The idea behind Crimson Wine and Becle SA de 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..