Correlation Between Hawesko Holding and NAKED WINES

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

By analyzing existing cross correlation between Hawesko Holding AG and NAKED WINES PLC, you can compare the effects of market volatilities on Hawesko Holding and NAKED WINES 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 Hawesko Holding with a short position of NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawesko Holding and NAKED WINES.

Diversification Opportunities for Hawesko Holding and NAKED WINES

0.04

Correlation Coefficient

Hawesko Holding  NAKED WINES

Significant diversification

The 3 months correlation between Hawesko and NAKED is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hawesko Holding AG and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC and Hawesko Holding 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 Hawesko Holding AG are associated (or correlated) with NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Hawesko Holding i.e., Hawesko Holding and NAKED WINES go up and down completely randomly.

Pair Corralation between Hawesko Holding and NAKED WINES

Assuming the 90 days trading horizon Hawesko Holding AG is expected to generate 1.29 times more return on investment than NAKED WINES. However, Hawesko Holding is 1.29 times more volatile than NAKED WINES PLC. It trades about 0.16 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.1 per unit of risk. If you would invest  2,300  in Hawesko Holding AG on September 22, 2024 and sell it today you would earn a total of  320.00  from holding Hawesko Holding AG or generate 13.91% return on investment over 90 days.

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

Hawesko Holding AG  vs.  NAKED WINES PLC

Hawesko Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawesko Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hawesko Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NAKED WINES PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAKED WINES PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NAKED WINES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hawesko Holding and NAKED WINES

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

The idea behind Hawesko Holding AG and NAKED WINES PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.