Correlation Between NAKED WINES and Sibanye Stillwater

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

Diversification Opportunities for NAKED WINES and Sibanye Stillwater

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between NAKED and Sibanye is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of NAKED WINES i.e., NAKED WINES and Sibanye Stillwater go up and down completely randomly.

Pair Corralation between NAKED WINES and Sibanye Stillwater

Assuming the 90 days horizon NAKED WINES PLC is expected to generate 0.75 times more return on investment than Sibanye Stillwater. However, NAKED WINES PLC is 1.33 times less risky than Sibanye Stillwater. It trades about -0.04 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about -0.04 per unit of risk. If you would invest  63.00  in NAKED WINES PLC on October 8, 2024 and sell it today you would lose (7.00) from holding NAKED WINES PLC or give up 11.11% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NAKED WINES PLC  vs.  Sibanye Stillwater Limited

 Performance 
       Timeline  
NAKED WINES PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NAKED WINES PLC 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.
Sibanye Stillwater 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sibanye Stillwater Limited 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.

NAKED WINES and Sibanye Stillwater Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NAKED WINES and Sibanye Stillwater

The main advantage of trading using opposite NAKED WINES and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.
The idea behind NAKED WINES PLC and Sibanye Stillwater Limited 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 Directory module to find actively traded commodities issued by global exchanges.

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