Correlation Between Treasury Wine and Samsung Electronics

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

Diversification Opportunities for Treasury Wine and Samsung Electronics

0.27

Correlation Coefficient

Treasury Wine  Samsung Electronics

Modest diversification

The 3 months correlation between Treasury and Samsung is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Treasury Wine i.e., Treasury Wine and Samsung Electronics go up and down completely randomly.

Pair Corralation between Treasury Wine and Samsung Electronics

Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Samsung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Treasury Wine Estates is 1.11 times less risky than Samsung Electronics. The stock trades about -0.14 of its potential returns per unit of risk. The Samsung Electronics Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  73,400  in Samsung Electronics Co on December 23, 2024 and sell it today you would earn a total of  5,600  from holding Samsung Electronics Co or generate 7.63% return on investment over 90 days.

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

Treasury Wine Estates  vs.  Samsung Electronics Co

Treasury Wine Estates

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Samsung Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Treasury Wine and Samsung Electronics

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

The idea behind Treasury Wine Estates and Samsung Electronics Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.