Correlation Between Treasury Wine and Tsingtao Brewery

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

Diversification Opportunities for Treasury Wine and Tsingtao Brewery

0.6

Correlation Coefficient

Treasury Wine  Tsingtao Brewery

Poor diversification

The 3 months correlation between Treasury and Tsingtao is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of Treasury Wine i.e., Treasury Wine and Tsingtao Brewery go up and down completely randomly.

Pair Corralation between Treasury Wine and Tsingtao Brewery

Assuming the 90 days horizon Treasury Wine Estates is expected to generate 0.88 times more return on investment than Tsingtao Brewery. However, Treasury Wine Estates is 1.13 times less risky than Tsingtao Brewery. It trades about -0.06 of its potential returns per unit of risk. Tsingtao Brewery is currently generating about -0.07 per unit of risk. If you would invest  490.00  in Treasury Wine Estates on April 24, 2025 and sell it today you would lose (31.00) from holding Treasury Wine Estates or give up 6.33% of portfolio value over 90 days.

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

Treasury Wine Estates  vs.  Tsingtao Brewery

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 nearly stable basic indicators, Treasury Wine is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tsingtao Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tsingtao Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Treasury Wine and Tsingtao Brewery

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

The idea behind Treasury Wine Estates and Tsingtao Brewery 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.