Correlation Between NAKED WINES and ASURE SOFTWARE

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

Diversification Opportunities for NAKED WINES and ASURE SOFTWARE

-0.08

Correlation Coefficient

NAKED WINES  ASURE SOFTWARE

Good diversification

The 3 months correlation between NAKED and ASURE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE 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 ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of NAKED WINES i.e., NAKED WINES and ASURE SOFTWARE go up and down completely randomly.

Pair Corralation between NAKED WINES and ASURE SOFTWARE

Assuming the 90 days horizon NAKED WINES PLC is expected to under-perform the ASURE SOFTWARE. In addition to that, NAKED WINES is 1.33 times more volatile than ASURE SOFTWARE. It trades about -0.02 of its total potential returns per unit of risk. ASURE SOFTWARE is currently generating about 0.03 per unit of volatility. If you would invest  870.00  in ASURE SOFTWARE on December 20, 2024 and sell it today you would earn a total of  20.00  from holding ASURE SOFTWARE or generate 2.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

NAKED WINES PLC  vs.  ASURE SOFTWARE

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.

ASURE SOFTWARE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ASURE SOFTWARE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NAKED WINES and ASURE SOFTWARE

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

The idea behind NAKED WINES PLC and ASURE SOFTWARE 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.