Correlation Between Forafric Global and Wilmar International
Can any of the company-specific risk be diversified away by investing in both Forafric Global and Wilmar International 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 Forafric Global and Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forafric Global PLC and Wilmar International, you can compare the effects of market volatilities on Forafric Global and Wilmar International 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 Forafric Global with a short position of Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forafric Global and Wilmar International.
Diversification Opportunities for Forafric Global and Wilmar International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Forafric and Wilmar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Forafric Global PLC and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and Forafric Global 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 Forafric Global PLC are associated (or correlated) with Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Forafric Global i.e., Forafric Global and Wilmar International go up and down completely randomly.
Pair Corralation between Forafric Global and Wilmar International
Assuming the 90 days horizon Forafric Global PLC is expected to under-perform the Wilmar International. In addition to that, Forafric Global is 5.5 times more volatile than Wilmar International. It trades about -0.07 of its total potential returns per unit of risk. Wilmar International is currently generating about 0.04 per unit of volatility. If you would invest 2,227 in Wilmar International on October 25, 2024 and sell it today you would earn a total of 22.00 from holding Wilmar International or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Forafric Global PLC vs. Wilmar International
Performance |
| Timeline |
| Forafric Global PLC |
| Wilmar International |
Forafric Global and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forafric Global and Wilmar International
The main advantage of trading using opposite Forafric Global and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forafric Global position performs unexpectedly, Wilmar International 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 Wilmar International will offset losses from the drop in Wilmar International's long position.| Forafric Global vs. Forafric Global PLC | Forafric Global vs. Reservoir Media Management | Forafric Global vs. Arbe Robotics Ltd | Forafric Global vs. ADS TEC ENERGY PLC |
| Wilmar International vs. Wilmar International Limited | Wilmar International vs. Wesfarmers Ltd ADR | Wilmar International vs. United Overseas Bank | Wilmar International vs. Kerry Group PLC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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