Correlation Between VIVA WINE and PLATO GOLD

Can any of the company-specific risk be diversified away by investing in both VIVA WINE and PLATO GOLD 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 VIVA WINE and PLATO GOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIVA WINE GROUP and PLATO GOLD P, you can compare the effects of market volatilities on VIVA WINE and PLATO GOLD 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 VIVA WINE with a short position of PLATO GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and PLATO GOLD.

Diversification Opportunities for VIVA WINE and PLATO GOLD

0.52

Correlation Coefficient

VIVA WINE  PLATO GOLD

Very weak diversification

The 3 months correlation between VIVA and PLATO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and PLATO GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLATO GOLD P and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with PLATO GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLATO GOLD P has no effect on the direction of VIVA WINE i.e., VIVA WINE and PLATO GOLD go up and down completely randomly.

Pair Corralation between VIVA WINE and PLATO GOLD

Assuming the 90 days horizon VIVA WINE GROUP is expected to under-perform the PLATO GOLD. But the stock apears to be less risky and, when comparing its historical volatility, VIVA WINE GROUP is 40.67 times less risky than PLATO GOLD. The stock trades about -0.11 of its potential returns per unit of risk. The PLATO GOLD P is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  0.35  in PLATO GOLD P on September 17, 2024 and sell it today you would earn a total of  0.65  from holding PLATO GOLD P or generate 185.71% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  PLATO GOLD P

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PLATO GOLD P

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLATO GOLD P are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PLATO GOLD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIVA WINE and PLATO GOLD

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

The idea behind VIVA WINE GROUP and PLATO GOLD P 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.