Correlation Between Naked Wines and Zinc Media

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

Diversification Opportunities for Naked Wines and Zinc Media

0.62

Correlation Coefficient

Naked Wines  Zinc Media

Poor diversification

The 3 months correlation between Naked and Zinc is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc and Zinc Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc Media Group 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 Zinc Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc Media Group has no effect on the direction of Naked Wines i.e., Naked Wines and Zinc Media go up and down completely randomly.

Pair Corralation between Naked Wines and Zinc Media

Assuming the 90 days trading horizon Naked Wines is expected to generate 1.17 times less return on investment than Zinc Media. In addition to that, Naked Wines is 2.74 times more volatile than Zinc Media Group. It trades about 0.06 of its total potential returns per unit of risk. Zinc Media Group is currently generating about 0.2 per unit of volatility. If you would invest  5,150  in Zinc Media Group on December 22, 2024 and sell it today you would earn a total of  1,100  from holding Zinc Media Group or generate 21.36% return on investment over 90 days.

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

Naked Wines plc  vs.  Zinc Media Group

Naked Wines plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Naked Wines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zinc Media Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zinc Media Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Zinc Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Naked Wines and Zinc Media

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

The idea behind Naked Wines plc and Zinc Media Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.