Correlation Between NAKED WINES and CRYOLIFE

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

Diversification Opportunities for NAKED WINES and CRYOLIFE

-0.4

Correlation Coefficient

NAKED WINES  CRYOLIFE

Very good diversification

The 3 months correlation between NAKED and CRYOLIFE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and CRYOLIFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRYOLIFE 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 CRYOLIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRYOLIFE has no effect on the direction of NAKED WINES i.e., NAKED WINES and CRYOLIFE go up and down completely randomly.

Pair Corralation between NAKED WINES and CRYOLIFE

Assuming the 90 days horizon NAKED WINES PLC is expected to generate 2.49 times more return on investment than CRYOLIFE. However, NAKED WINES is 2.49 times more volatile than CRYOLIFE. It trades about -0.01 of its potential returns per unit of risk. CRYOLIFE is currently generating about -0.14 per unit of risk. If you would invest  55.00  in NAKED WINES PLC on December 20, 2024 and sell it today you would lose (6.00) from holding NAKED WINES PLC or give up 10.91% of portfolio value over 90 days.

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

NAKED WINES PLC  vs.  CRYOLIFE

NAKED WINES PLC

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

CRYOLIFE

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRYOLIFE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NAKED WINES and CRYOLIFE

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

The idea behind NAKED WINES PLC and CRYOLIFE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.