Correlation Between Treasury Wine and Datang International
Can any of the company-specific risk be diversified away by investing in both Treasury Wine and Datang International 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 Datang International 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 Datang International Power, you can compare the effects of market volatilities on Treasury Wine and Datang International 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 Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Datang International.
Diversification Opportunities for Treasury Wine and Datang International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Treasury and Datang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International 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 Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Treasury Wine i.e., Treasury Wine and Datang International go up and down completely randomly.
Pair Corralation between Treasury Wine and Datang International
Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Datang International. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 2.24 times less risky than Datang International. The stock trades about 0.0 of its potential returns per unit of risk. The Datang International Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9.55 in Datang International Power on September 12, 2024 and sell it today you would earn a total of 7.45 from holding Datang International Power or generate 78.01% 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. Datang International Power
Performance |
| Timeline |
| Treasury Wine Estates |
| Datang International |
Treasury Wine and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Datang International
The main advantage of trading using opposite Treasury Wine and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| Treasury Wine vs. INDO RAMA SYNTHETIC | Treasury Wine vs. COMMERCIAL VEHICLE | Treasury Wine vs. SHIN ETSU CHEMICAL | Treasury Wine vs. Carsales |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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