Correlation Between Haier Smart and Treasury Wine

Can any of the company-specific risk be diversified away by investing in both Haier Smart and Treasury Wine 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 Haier Smart and Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Haier Smart Home and Treasury Wine Estates, you can compare the effects of market volatilities on Haier Smart and Treasury Wine 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 Haier Smart with a short position of Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and Treasury Wine.

Diversification Opportunities for Haier Smart and Treasury Wine

0.47

Correlation Coefficient

Haier Smart  Treasury Wine

Very weak diversification

The 3 months correlation between Haier and Treasury is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates and Haier Smart 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 Haier Smart Home are associated (or correlated) with Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Haier Smart i.e., Haier Smart and Treasury Wine go up and down completely randomly.

Pair Corralation between Haier Smart and Treasury Wine

Assuming the 90 days trading horizon Haier Smart Home is expected to generate 1.14 times more return on investment than Treasury Wine. However, Haier Smart is 1.14 times more volatile than Treasury Wine Estates. It trades about -0.03 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.08 per unit of risk. If you would invest  188.00  in Haier Smart Home on October 5, 2024 and sell it today you would lose (8.00) from holding Haier Smart Home or give up 4.26% of portfolio value over 90 days.

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

Haier Smart Home  vs.  Treasury Wine Estates

Haier Smart Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haier Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Haier Smart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Treasury Wine Estates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Haier Smart and Treasury Wine

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

The idea behind Haier Smart Home and Treasury Wine Estates 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.