Correlation Between Naked Wines and CAMEBO

Can any of the company-specific risk be diversified away by investing in both Naked Wines and CAMEBO 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 CAMEBO 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 CAMEBO 525 27 APR 29, you can compare the effects of market volatilities on Naked Wines and CAMEBO 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 CAMEBO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and CAMEBO.

Diversification Opportunities for Naked Wines and CAMEBO

-0.53

Correlation Coefficient

Naked Wines  CAMEBO

Excellent diversification

The 3 months correlation between Naked and CAMEBO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and CAMEBO 525 27 APR 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAMEBO 525 27 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 CAMEBO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAMEBO 525 27 has no effect on the direction of Naked Wines i.e., Naked Wines and CAMEBO go up and down completely randomly.

Pair Corralation between Naked Wines and CAMEBO

Assuming the 90 days horizon Naked Wines plc is expected to under-perform the CAMEBO. But the pink sheet apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 1.05 times less risky than CAMEBO. The pink sheet trades about -0.16 of its potential returns per unit of risk. The CAMEBO 525 27 APR 29 is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  9,696  in CAMEBO 525 27 APR 29 on October 10, 2024 and sell it today you would lose (177.00) from holding CAMEBO 525 27 APR 29 or give up 1.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Naked Wines plc  vs.  CAMEBO 525 27 APR 29

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.

CAMEBO 525 27

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAMEBO 525 27 APR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CAMEBO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Naked Wines and CAMEBO

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

The idea behind Naked Wines plc and CAMEBO 525 27 APR 29 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.