Correlation Between Treasury Wine and Origin Agritech
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Origin Agritech 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 Treasury Wine and Origin Agritech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treasury Wine Estates and Origin Agritech, you can compare the effects of market volatilities on Treasury Wine and Origin Agritech 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 Treasury Wine with a short position of Origin Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Origin Agritech.
Diversification Opportunities for Treasury Wine and Origin Agritech
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Treasury and Origin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Origin Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Agritech and Treasury 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 Treasury Wine Estates are associated (or correlated) with Origin Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Agritech has no effect on the direction of Treasury Wine i.e., Treasury Wine and Origin Agritech go up and down completely randomly.
Pair Corralation between Treasury Wine and Origin Agritech
Assuming the 90 days horizon Treasury Wine is expected to generate 3.62 times less return on investment than Origin Agritech. But when comparing it to its historical volatility, Treasury Wine Estates is 3.91 times less risky than Origin Agritech. It trades about 0.04 of its potential returns per unit of risk. Origin Agritech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Origin Agritech on September 14, 2024 and sell it today you would earn a total of 36.00 from holding Origin Agritech or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Treasury Wine Estates vs. Origin Agritech
Performance |
| Timeline |
| Treasury Wine Estates |
| Origin Agritech |
Treasury Wine and Origin Agritech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Origin Agritech
The main advantage of trading using opposite Treasury Wine and Origin Agritech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Origin Agritech 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 Origin Agritech will offset losses from the drop in Origin Agritech's long position.| Treasury Wine vs. Diageo plc | Treasury Wine vs. Thai Beverage Public | Treasury Wine vs. Rmy Cointreau SA |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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