Correlation Between IM Vinaria and Prefab Bucures

Can any of the company-specific risk be diversified away by investing in both IM Vinaria and Prefab Bucures 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 IM Vinaria and Prefab Bucures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IM Vinaria Purcari and Prefab Bucures, you can compare the effects of market volatilities on IM Vinaria and Prefab Bucures 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 IM Vinaria with a short position of Prefab Bucures. Check out your portfolio center. Please also check ongoing floating volatility patterns of IM Vinaria and Prefab Bucures.

Diversification Opportunities for IM Vinaria and Prefab Bucures

-0.61

Correlation Coefficient

IM Vinaria  Prefab Bucures

Excellent diversification

The 3 months correlation between WINE and Prefab is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding IM Vinaria Purcari and Prefab Bucures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prefab Bucures and IM Vinaria 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 IM Vinaria Purcari are associated (or correlated) with Prefab Bucures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prefab Bucures has no effect on the direction of IM Vinaria i.e., IM Vinaria and Prefab Bucures go up and down completely randomly.

Pair Corralation between IM Vinaria and Prefab Bucures

Assuming the 90 days trading horizon IM Vinaria Purcari is expected to generate 0.36 times more return on investment than Prefab Bucures. However, IM Vinaria Purcari is 2.77 times less risky than Prefab Bucures. It trades about 0.06 of its potential returns per unit of risk. Prefab Bucures is currently generating about -0.1 per unit of risk. If you would invest  1,460  in IM Vinaria Purcari on December 23, 2024 and sell it today you would earn a total of  42.00  from holding IM Vinaria Purcari or generate 2.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

IM Vinaria Purcari  vs.  Prefab Bucures

IM Vinaria Purcari

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IM Vinaria Purcari are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Prefab Bucures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prefab Bucures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IM Vinaria and Prefab Bucures

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

The idea behind IM Vinaria Purcari and Prefab Bucures 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 CEOs Directory module to screen CEOs from public companies around the world.