Correlation Between VIRGIN WINES and BASF SE

Can any of the company-specific risk be diversified away by investing in both VIRGIN WINES and BASF SE 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 VIRGIN WINES and BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VIRGIN WINES UK and BASF SE, you can compare the effects of market volatilities on VIRGIN WINES and BASF SE 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 VIRGIN WINES with a short position of BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIRGIN WINES and BASF SE.

Diversification Opportunities for VIRGIN WINES and BASF SE

0.05

Correlation Coefficient

VIRGIN WINES  BASF SE

Significant diversification

The 3 months correlation between VIRGIN and BASF is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding VIRGIN WINES UK and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE and VIRGIN 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 VIRGIN WINES UK are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of VIRGIN WINES i.e., VIRGIN WINES and BASF SE go up and down completely randomly.

Pair Corralation between VIRGIN WINES and BASF SE

Assuming the 90 days horizon VIRGIN WINES UK is expected to generate 2.23 times more return on investment than BASF SE. However, VIRGIN WINES is 2.23 times more volatile than BASF SE. It trades about 0.14 of its potential returns per unit of risk. BASF SE is currently generating about 0.05 per unit of risk. If you would invest  36.00  in VIRGIN WINES UK on April 23, 2025 and sell it today you would earn a total of  11.00  from holding VIRGIN WINES UK or generate 30.56% return on investment over 90 days.

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

VIRGIN WINES UK  vs.  BASF SE

VIRGIN WINES UK

Risk-Adjusted Performance

Good

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

BASF SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BASF SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VIRGIN WINES and BASF SE

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

The idea behind VIRGIN WINES UK and BASF SE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.