Correlation Between Viva Wine and High Coast

Can any of the company-specific risk be diversified away by investing in both Viva Wine and High Coast 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 High Coast 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 High Coast Distillery, you can compare the effects of market volatilities on Viva Wine and High Coast 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 High Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viva Wine and High Coast.

Diversification Opportunities for Viva Wine and High Coast

-0.74

Correlation Coefficient

Viva Wine  High Coast

Pay attention - limited upside

The 3 months correlation between Viva and High is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Viva Wine Group and High Coast Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Coast Distillery 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 High Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Coast Distillery has no effect on the direction of Viva Wine i.e., Viva Wine and High Coast go up and down completely randomly.

Pair Corralation between Viva Wine and High Coast

Assuming the 90 days trading horizon Viva Wine Group is expected to generate 0.56 times more return on investment than High Coast. However, Viva Wine Group is 1.77 times less risky than High Coast. It trades about 0.06 of its potential returns per unit of risk. High Coast Distillery is currently generating about 0.0 per unit of risk. If you would invest  2,879  in Viva Wine Group on September 12, 2024 and sell it today you would earn a total of  1,051  from holding Viva Wine Group or generate 36.51% return on investment over 90 days.

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

Viva Wine Group  vs.  High Coast Distillery

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. 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.

High Coast Distillery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in High Coast Distillery are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, High Coast sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viva Wine and High Coast

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

The idea behind Viva Wine Group and High Coast Distillery 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.