Correlation Between Treasury Wine and ANTA SPORTS

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

Diversification Opportunities for Treasury Wine and ANTA SPORTS

0.64

Correlation Coefficient

Treasury Wine  ANTA SPORTS

Poor diversification

The 3 months correlation between Treasury and ANTA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT 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 ANTA SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA SPORTS PRODUCT has no effect on the direction of Treasury Wine i.e., Treasury Wine and ANTA SPORTS go up and down completely randomly.

Pair Corralation between Treasury Wine and ANTA SPORTS

Assuming the 90 days horizon Treasury Wine is expected to generate 4.68 times less return on investment than ANTA SPORTS. But when comparing it to its historical volatility, Treasury Wine Estates is 2.24 times less risky than ANTA SPORTS. It trades about 0.06 of its potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  789.00  in ANTA SPORTS PRODUCT on September 14, 2024 and sell it today you would earn a total of  245.00  from holding ANTA SPORTS PRODUCT or generate 31.05% return on investment over 90 days.

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

Treasury Wine Estates  vs.  ANTA SPORTS PRODUCT

Treasury Wine Estates

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Treasury Wine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANTA SPORTS PRODUCT are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ANTA SPORTS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Treasury Wine and ANTA SPORTS

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

The idea behind Treasury Wine Estates and ANTA SPORTS PRODUCT 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.