Correlation Between Overseas Chinese and Wilmar International
Can any of the company-specific risk be diversified away by investing in both Overseas Chinese 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 Overseas Chinese and Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overseas Chinese Banking and Wilmar International, you can compare the effects of market volatilities on Overseas Chinese 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 Overseas Chinese with a short position of Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overseas Chinese and Wilmar International.
Diversification Opportunities for Overseas Chinese and Wilmar International
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Overseas and Wilmar is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Chinese Banking and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and Overseas Chinese 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 Overseas Chinese Banking 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 Overseas Chinese i.e., Overseas Chinese and Wilmar International go up and down completely randomly.
Pair Corralation between Overseas Chinese and Wilmar International
Assuming the 90 days horizon Overseas Chinese Banking is expected to generate 0.79 times more return on investment than Wilmar International. However, Overseas Chinese Banking is 1.26 times less risky than Wilmar International. It trades about 0.09 of its potential returns per unit of risk. Wilmar International is currently generating about -0.02 per unit of risk. If you would invest 1,678 in Overseas Chinese Banking on August 31, 2024 and sell it today you would earn a total of 713.00 from holding Overseas Chinese Banking or generate 42.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Overseas Chinese Banking vs. Wilmar International
Performance |
| Timeline |
| Overseas Chinese Banking |
| Wilmar International |
Overseas Chinese and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overseas Chinese and Wilmar International
The main advantage of trading using opposite Overseas Chinese and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overseas Chinese 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.| Overseas Chinese vs. Swedbank AB | Overseas Chinese vs. KBC Groep NV | Overseas Chinese vs. Nordea Bank Abp | Overseas Chinese vs. DBS Group Holdings |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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