Correlation Between Willamette Valley and Tianjin Capital

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

Diversification Opportunities for Willamette Valley and Tianjin Capital

0.11

Correlation Coefficient

Willamette Valley  Tianjin Capital

Average diversification

The 3 months correlation between Willamette and Tianjin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Willamette Valley Vineyards and Tianjin Capital Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Capital Envi 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 Tianjin Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Capital Envi has no effect on the direction of Willamette Valley i.e., Willamette Valley and Tianjin Capital go up and down completely randomly.

Pair Corralation between Willamette Valley and Tianjin Capital

Assuming the 90 days horizon Willamette Valley Vineyards is expected to under-perform the Tianjin Capital. But the preferred stock apears to be less risky and, when comparing its historical volatility, Willamette Valley Vineyards is 2.13 times less risky than Tianjin Capital. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Tianjin Capital Environmental is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9.93  in Tianjin Capital Environmental on October 25, 2024 and sell it today you would earn a total of  28.07  from holding Tianjin Capital Environmental or generate 282.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Willamette Valley Vineyards  vs.  Tianjin Capital Environmental

Willamette Valley

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Willamette Valley is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Tianjin Capital Envi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, Tianjin Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Willamette Valley and Tianjin Capital

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

The idea behind Willamette Valley Vineyards and Tianjin Capital Environmental 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.