Correlation Between NAKED WINES and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both NAKED WINES and Yanzhou Coal 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 Yanzhou Coal 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 Yanzhou Coal Mining, you can compare the effects of market volatilities on NAKED WINES and Yanzhou Coal 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 Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAKED WINES and Yanzhou Coal.
Diversification Opportunities for NAKED WINES and Yanzhou Coal
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NAKED and Yanzhou is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NAKED WINES PLC and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining 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 Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of NAKED WINES i.e., NAKED WINES and Yanzhou Coal go up and down completely randomly.
Pair Corralation between NAKED WINES and Yanzhou Coal
Assuming the 90 days horizon NAKED WINES PLC is expected to generate 2.7 times more return on investment than Yanzhou Coal. However, NAKED WINES is 2.7 times more volatile than Yanzhou Coal Mining. It trades about 0.09 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.18 per unit of risk. If you would invest 56.00 in NAKED WINES PLC on November 4, 2024 and sell it today you would earn a total of 4.00 from holding NAKED WINES PLC or generate 7.14% 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. Yanzhou Coal Mining
Performance |
| Timeline |
| NAKED WINES PLC |
| Yanzhou Coal Mining |
NAKED WINES and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAKED WINES and Yanzhou Coal
The main advantage of trading using opposite NAKED WINES and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAKED WINES position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal's long position.| NAKED WINES vs. Major Drilling Group | NAKED WINES vs. Easy Software AG | NAKED WINES vs. VELA TECHNOLPLC LS 0001 | NAKED WINES vs. BioNTech SE |
| Yanzhou Coal vs. MINCO SILVER | Yanzhou Coal vs. Perseus Mining Limited | Yanzhou Coal vs. KIMBALL ELECTRONICS | Yanzhou Coal vs. Nanjing Panda Electronics |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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