Correlation Between Treasury Wine and HOCHSCHILD MINING

Can any of the company-specific risk be diversified away by investing in both Treasury Wine and HOCHSCHILD MINING 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 HOCHSCHILD MINING 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 HOCHSCHILD MINING, you can compare the effects of market volatilities on Treasury Wine and HOCHSCHILD MINING 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 HOCHSCHILD MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and HOCHSCHILD MINING.

Diversification Opportunities for Treasury Wine and HOCHSCHILD MINING

0.49

Correlation Coefficient

Treasury Wine  HOCHSCHILD MINING

Very weak diversification

The 3 months correlation between Treasury and HOCHSCHILD is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and HOCHSCHILD MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOCHSCHILD MINING 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 HOCHSCHILD MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOCHSCHILD MINING has no effect on the direction of Treasury Wine i.e., Treasury Wine and HOCHSCHILD MINING go up and down completely randomly.

Pair Corralation between Treasury Wine and HOCHSCHILD MINING

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the HOCHSCHILD MINING. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 1.9 times less risky than HOCHSCHILD MINING. The stock trades about -0.05 of its potential returns per unit of risk. The HOCHSCHILD MINING is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  210.00  in HOCHSCHILD MINING on October 26, 2024 and sell it today you would earn a total of  18.00  from holding HOCHSCHILD MINING or generate 8.57% return on investment over 90 days.

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

Treasury Wine Estates  vs.  HOCHSCHILD MINING

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.

HOCHSCHILD MINING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOCHSCHILD MINING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Treasury Wine and HOCHSCHILD MINING

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

The idea behind Treasury Wine Estates and HOCHSCHILD MINING 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.