Correlation Between NAKED WINES and Hawesko Holding

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

Diversification Opportunities for NAKED WINES and Hawesko Holding

0.04

Correlation Coefficient

NAKED WINES  Hawesko Holding

Significant diversification

The 3 months correlation between NAKED and Hawesko is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Hawesko Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawesko Holding AG 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 Hawesko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawesko Holding AG has no effect on the direction of NAKED WINES i.e., NAKED WINES and Hawesko Holding go up and down completely randomly.

Pair Corralation between NAKED WINES and Hawesko Holding

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the Hawesko Holding. In addition to that, NAKED WINES is 1.43 times more volatile than Hawesko Holding AG. It trades about -0.04 of its total potential returns per unit of risk. Hawesko Holding AG is currently generating about 0.0 per unit of volatility. If you would invest  2,730  in Hawesko Holding AG on September 22, 2024 and sell it today you would lose (110.00) from holding Hawesko Holding AG or give up 4.03% of portfolio value over 90 days.

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

NAKED WINES PLC  vs.  Hawesko Holding AG

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.

Hawesko Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawesko Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hawesko Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NAKED WINES and Hawesko Holding

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

The idea behind NAKED WINES PLC and Hawesko Holding AG 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.