Correlation Between VIVA WINE and Diamyd Medical

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

By analyzing existing cross correlation between VIVA WINE GROUP and Diamyd Medical AB, you can compare the effects of market volatilities on VIVA WINE and Diamyd Medical 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 VIVA WINE with a short position of Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and Diamyd Medical.

Diversification Opportunities for VIVA WINE and Diamyd Medical

-0.74

Correlation Coefficient

VIVA WINE  Diamyd Medical

Pay attention - limited upside

The 3 months correlation between VIVA and Diamyd is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB and VIVA 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 VIVA WINE GROUP are associated (or correlated) with Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of VIVA WINE i.e., VIVA WINE and Diamyd Medical go up and down completely randomly.

Pair Corralation between VIVA WINE and Diamyd Medical

Assuming the 90 days horizon VIVA WINE is expected to generate 12.52 times less return on investment than Diamyd Medical. But when comparing it to its historical volatility, VIVA WINE GROUP is 2.43 times less risky than Diamyd Medical. It trades about 0.03 of its potential returns per unit of risk. Diamyd Medical AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  139.00  in Diamyd Medical AB on October 25, 2024 and sell it today you would earn a total of  13.00  from holding Diamyd Medical AB or generate 9.35% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  Diamyd Medical AB

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Diamyd Medical AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Diamyd Medical AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Diamyd Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIVA WINE and Diamyd Medical

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

The idea behind VIVA WINE GROUP and Diamyd Medical AB 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.