Correlation Between Naked Wines and Pfeiffer Vacuum

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

Diversification Opportunities for Naked Wines and Pfeiffer Vacuum

0.43

Correlation Coefficient

Naked Wines  Pfeiffer Vacuum

Very weak diversification

The 3 months correlation between Naked and Pfeiffer is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Pfeiffer Vacuum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfeiffer Vacuum Tech 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 Pfeiffer Vacuum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfeiffer Vacuum Tech has no effect on the direction of Naked Wines i.e., Naked Wines and Pfeiffer Vacuum go up and down completely randomly.

Pair Corralation between Naked Wines and Pfeiffer Vacuum

Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Pfeiffer Vacuum. In addition to that, Naked Wines is 6.59 times more volatile than Pfeiffer Vacuum Technology. It trades about -0.03 of its total potential returns per unit of risk. Pfeiffer Vacuum Technology is currently generating about -0.01 per unit of volatility. If you would invest  16,096  in Pfeiffer Vacuum Technology on October 10, 2024 and sell it today you would lose (676.00) from holding Pfeiffer Vacuum Technology or give up 4.2% of portfolio value over 90 days.

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

Naked Wines plc  vs.  Pfeiffer Vacuum Technology

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pfeiffer Vacuum Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Naked Wines and Pfeiffer Vacuum

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

The idea behind Naked Wines plc and Pfeiffer Vacuum Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.