Correlation Between VIVA WINE and Indutrade

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

Diversification Opportunities for VIVA WINE and Indutrade

0.87

Correlation Coefficient

VIVA WINE  Indutrade

Very poor diversification

The 3 months correlation between VIVA and Indutrade is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of VIVA WINE i.e., VIVA WINE and Indutrade go up and down completely randomly.

Pair Corralation between VIVA WINE and Indutrade

Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 2.61 times more return on investment than Indutrade. However, VIVA WINE is 2.61 times more volatile than Indutrade AB. It trades about 0.07 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.06 per unit of risk. If you would invest  163.00  in VIVA WINE GROUP on September 28, 2024 and sell it today you would earn a total of  161.00  from holding VIVA WINE GROUP or generate 98.77% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  Indutrade 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 uncertain performance in the last few months, the Stock's basic 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.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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 VIVA WINE and Indutrade

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

The idea behind VIVA WINE GROUP and Indutrade 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.

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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.