Correlation Between Mowi ASA and Wilmar International
Can any of the company-specific risk be diversified away by investing in both Mowi ASA 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 Mowi ASA and Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mowi ASA and Wilmar International Limited, you can compare the effects of market volatilities on Mowi ASA 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 Mowi ASA with a short position of Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mowi ASA and Wilmar International.
Diversification Opportunities for Mowi ASA and Wilmar International
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mowi and Wilmar is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and Mowi ASA 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 Mowi ASA 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 Mowi ASA i.e., Mowi ASA and Wilmar International go up and down completely randomly.
Pair Corralation between Mowi ASA and Wilmar International
Assuming the 90 days horizon Mowi ASA is expected to generate 1.38 times more return on investment than Wilmar International. However, Mowi ASA is 1.38 times more volatile than Wilmar International Limited. It trades about 0.09 of its potential returns per unit of risk. Wilmar International Limited is currently generating about -0.01 per unit of risk. If you would invest 651.00 in Mowi ASA on September 23, 2024 and sell it today you would earn a total of 993.00 from holding Mowi ASA or generate 152.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mowi ASA vs. Wilmar International Limited
Performance |
| Timeline |
| Mowi ASA |
| Wilmar International |
Mowi ASA and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mowi ASA and Wilmar International
The main advantage of trading using opposite Mowi ASA and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mowi ASA 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.The idea behind Mowi ASA and Wilmar International Limited 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.| Wilmar International vs. Archer Daniels Midland | Wilmar International vs. Tyson Foods | Wilmar International vs. MOWI ASA SPADR | Wilmar International vs. Mowi ASA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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