Correlation Between NAKED WINES and MTI WIRELESS

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

Diversification Opportunities for NAKED WINES and MTI WIRELESS

-0.21

Correlation Coefficient

NAKED WINES  MTI WIRELESS

Very good diversification

The 3 months correlation between NAKED and MTI is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and MTI WIRELESS EDGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI WIRELESS EDGE 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 MTI WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI WIRELESS EDGE has no effect on the direction of NAKED WINES i.e., NAKED WINES and MTI WIRELESS go up and down completely randomly.

Pair Corralation between NAKED WINES and MTI WIRELESS

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the MTI WIRELESS. But the stock apears to be less risky and, when comparing its historical volatility, NAKED WINES PLC is 1.64 times less risky than MTI WIRELESS. The stock trades about -0.04 of its potential returns per unit of risk. The MTI WIRELESS EDGE is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  46.00  in MTI WIRELESS EDGE on October 22, 2024 and sell it today you would earn a total of  10.00  from holding MTI WIRELESS EDGE or generate 21.74% 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.  MTI WIRELESS EDGE

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MTI WIRELESS EDGE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MTI WIRELESS EDGE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MTI WIRELESS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NAKED WINES and MTI WIRELESS

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

The idea behind NAKED WINES PLC and MTI WIRELESS EDGE 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.