Correlation Between Naked Wines and Panther Metals

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

Diversification Opportunities for Naked Wines and Panther Metals

-0.13

Correlation Coefficient

Naked Wines  Panther Metals

Good diversification

The 3 months correlation between Naked and Panther is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Panther Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panther Metals PLC 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 Panther Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panther Metals PLC has no effect on the direction of Naked Wines i.e., Naked Wines and Panther Metals go up and down completely randomly.

Pair Corralation between Naked Wines and Panther Metals

Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the Panther Metals. But the stock apears to be less risky and, when comparing its historical volatility, Naked Wines plc is 1.61 times less risky than Panther Metals. The stock trades about -0.08 of its potential returns per unit of risk. The Panther Metals PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,750  in Panther Metals PLC on September 30, 2024 and sell it today you would earn a total of  500.00  from holding Panther Metals PLC or generate 6.45% 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.  Panther Metals PLC

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Panther Metals PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Panther Metals PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Panther Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Naked Wines and Panther Metals

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

The idea behind Naked Wines plc and Panther Metals PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..