Correlation Between Willamette Valley and Santech Holdings
Can any of the company-specific risk be diversified away by investing in both Willamette Valley and Santech Holdings 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 Willamette Valley and Santech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willamette Valley Vineyards and Santech Holdings Limited, you can compare the effects of market volatilities on Willamette Valley and Santech Holdings 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 Willamette Valley with a short position of Santech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willamette Valley and Santech Holdings.
Diversification Opportunities for Willamette Valley and Santech Holdings
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Willamette and Santech is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Santech Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santech Holdings and Willamette Valley 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 Willamette Valley Vineyards are associated (or correlated) with Santech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santech Holdings has no effect on the direction of Willamette Valley i.e., Willamette Valley and Santech Holdings go up and down completely randomly.
Pair Corralation between Willamette Valley and Santech Holdings
Given the investment horizon of 90 days Willamette Valley Vineyards is expected to under-perform the Santech Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 15.39 times less risky than Santech Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Santech Holdings Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 595.00 in Santech Holdings Limited on August 27, 2024 and sell it today you would lose (491.00) from holding Santech Holdings Limited or give up 82.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Willamette Valley Vineyards vs. Santech Holdings Limited
Performance |
| Timeline |
| Willamette Valley |
| Santech Holdings |
Willamette Valley and Santech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Willamette Valley and Santech Holdings
The main advantage of trading using opposite Willamette Valley and Santech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willamette Valley position performs unexpectedly, Santech Holdings 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 Santech Holdings will offset losses from the drop in Santech Holdings' long position.| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Andrew Peller Limited | Willamette Valley vs. Iconic Brands | Willamette Valley vs. Naked Wines plc |
| Santech Holdings vs. Japan Tobacco ADR | Santech Holdings vs. Diageo PLC ADR | Santech Holdings vs. Compania Cervecerias Unidas | Santech Holdings vs. Willamette Valley Vineyards |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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