Correlation Between Treasury Wine and Solarmax Technology

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

Diversification Opportunities for Treasury Wine and Solarmax Technology

-0.65

Correlation Coefficient

Treasury Wine  Solarmax Technology

Excellent diversification

The 3 months correlation between Treasury and Solarmax is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax Technology 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 Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of Treasury Wine i.e., Treasury Wine and Solarmax Technology go up and down completely randomly.

Pair Corralation between Treasury Wine and Solarmax Technology

Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.35 times more return on investment than Solarmax Technology. However, Treasury Wine Estates is 2.86 times less risky than Solarmax Technology. It trades about -0.01 of its potential returns per unit of risk. Solarmax Technology Common is currently generating about -0.02 per unit of risk. If you would invest  999.00  in Treasury Wine Estates on October 11, 2024 and sell it today you would lose (309.00) from holding Treasury Wine Estates or give up 30.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	57.89%
Values	Daily Returns

Treasury Wine Estates  vs.  Solarmax Technology Common

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 weak 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.

Solarmax Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solarmax Technology Common are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Solarmax Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and Solarmax Technology

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

The idea behind Treasury Wine Estates and Solarmax Technology Common 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 Stocks Directory module to find actively traded stocks across global markets.