Correlation Between NAKED WINES and PLAY2CHILL

Can any of the company-specific risk be diversified away by investing in both NAKED WINES and PLAY2CHILL 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 PLAY2CHILL 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 PLAY2CHILL SA ZY, you can compare the effects of market volatilities on NAKED WINES and PLAY2CHILL 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 PLAY2CHILL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and PLAY2CHILL.

Diversification Opportunities for NAKED WINES and PLAY2CHILL

-0.18

Correlation Coefficient

NAKED WINES  PLAY2CHILL

Good diversification

The 3 months correlation between NAKED and PLAY2CHILL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and PLAY2CHILL SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAY2CHILL SA ZY 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 PLAY2CHILL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAY2CHILL SA ZY has no effect on the direction of NAKED WINES i.e., NAKED WINES and PLAY2CHILL go up and down completely randomly.

Pair Corralation between NAKED WINES and PLAY2CHILL

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the PLAY2CHILL. But the stock apears to be less risky and, when comparing its historical volatility, NAKED WINES PLC is 1.41 times less risky than PLAY2CHILL. The stock trades about -0.17 of its potential returns per unit of risk. The PLAY2CHILL SA ZY is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  82.00  in PLAY2CHILL SA ZY on September 17, 2024 and sell it today you would earn a total of  3.00  from holding PLAY2CHILL SA ZY or generate 3.66% return on investment over 90 days.

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

NAKED WINES PLC  vs.  PLAY2CHILL SA ZY

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. Despite nearly stable basic indicators, NAKED WINES is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PLAY2CHILL SA ZY

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAY2CHILL SA ZY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PLAY2CHILL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NAKED WINES and PLAY2CHILL

The main advantage of trading using opposite NAKED WINES and PLAY2CHILL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, PLAY2CHILL 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 PLAY2CHILL will offset losses from the drop in PLAY2CHILL's long position.

The idea behind NAKED WINES PLC and PLAY2CHILL SA ZY 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.