Correlation Between Naked Wines and Cadeler AS

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

By analyzing existing cross correlation between Naked Wines plc and Cadeler AS, you can compare the effects of market volatilities on Naked Wines and Cadeler AS 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 Naked Wines with a short position of Cadeler AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and Cadeler AS.

Diversification Opportunities for Naked Wines and Cadeler AS

-0.34

Correlation Coefficient

Naked Wines  Cadeler AS

Very good diversification

The 3 months correlation between Naked and Cadeler is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS and Naked Wines 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 Naked Wines plc are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Naked Wines i.e., Naked Wines and Cadeler AS go up and down completely randomly.

Pair Corralation between Naked Wines and Cadeler AS

Assuming the 90 days horizon Naked Wines plc is expected to under-perform the Cadeler AS. But the pink sheet apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 1.14 times less risky than Cadeler AS. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Cadeler AS is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,378  in Cadeler AS on October 8, 2024 and sell it today you would lose (79.00) from holding Cadeler AS or give up 3.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Naked Wines plc  vs.  Cadeler AS

Naked Wines plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Naked Wines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Naked Wines and Cadeler AS

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

The idea behind Naked Wines plc and Cadeler AS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.