Correlation Between Naked Wines and Elicio Therapeutics

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

Diversification Opportunities for Naked Wines and Elicio Therapeutics

0.33

Correlation Coefficient

Naked Wines  Elicio Therapeutics

Weak diversification

The 3 months correlation between Naked and Elicio is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Elicio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elicio Therapeutics 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 Elicio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elicio Therapeutics has no effect on the direction of Naked Wines i.e., Naked Wines and Elicio Therapeutics go up and down completely randomly.

Pair Corralation between Naked Wines and Elicio Therapeutics

Assuming the 90 days horizon Naked Wines plc is expected to under-perform the Elicio Therapeutics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 3.76 times less risky than Elicio Therapeutics. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Elicio Therapeutics is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  529.00  in Elicio Therapeutics on September 17, 2024 and sell it today you would lose (38.00) from holding Elicio Therapeutics or give up 7.18% of portfolio value over 90 days.

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

Naked Wines plc  vs.  Elicio Therapeutics

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. 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.

Elicio Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elicio Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Elicio Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Naked Wines and Elicio Therapeutics

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

The idea behind Naked Wines plc and Elicio Therapeutics 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 Transaction History module to view history of all your transactions and understand their impact on performance.