Correlation Between ITALIAN WINE and BASF SE

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

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

Diversification Opportunities for ITALIAN WINE and BASF SE

-0.29

Correlation Coefficient

ITALIAN WINE  BASF SE

Very good diversification

The 3 months correlation between ITALIAN and BASF is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE and ITALIAN 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and BASF SE go up and down completely randomly.

Pair Corralation between ITALIAN WINE and BASF SE

Assuming the 90 days horizon ITALIAN WINE is expected to generate 10.61 times less return on investment than BASF SE. But when comparing it to its historical volatility, ITALIAN WINE BRANDS is 1.54 times less risky than BASF SE. It trades about 0.01 of its potential returns per unit of risk. BASF SE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,264  in BASF SE on April 25, 2025 and sell it today you would earn a total of  236.00  from holding BASF SE or generate 5.53% return on investment over 90 days.

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

ITALIAN WINE BRANDS  vs.  BASF SE

ITALIAN WINE BRANDS

Risk-Adjusted Performance

Weak

Over the last 90 days ITALIAN WINE BRANDS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ITALIAN WINE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BASF SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE are ranked lower than 4 (%) 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 ITALIAN WINE and BASF SE

The main advantage of trading using opposite ITALIAN WINE and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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 ITALIAN WINE BRANDS 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.