Correlation Between Wilmar International and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Wilmar International and Archer Daniels 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 Wilmar International and Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar International Limited and Archer Daniels Midland, you can compare the effects of market volatilities on Wilmar International and Archer Daniels 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 Wilmar International with a short position of Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and Archer Daniels.
Diversification Opportunities for Wilmar International and Archer Daniels
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wilmar and Archer is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International Limited and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and Wilmar International 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 Wilmar International Limited are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Wilmar International i.e., Wilmar International and Archer Daniels go up and down completely randomly.
Pair Corralation between Wilmar International and Archer Daniels
Assuming the 90 days trading horizon Wilmar International Limited is expected to generate 1.63 times more return on investment than Archer Daniels. However, Wilmar International is 1.63 times more volatile than Archer Daniels Midland. It trades about -0.02 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.29 per unit of risk. If you would invest 217.00 in Wilmar International Limited on September 23, 2024 and sell it today you would lose (2.00) from holding Wilmar International Limited or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmar International Limited vs. Archer Daniels Midland
Performance |
| Timeline |
| Wilmar International |
| Archer Daniels Midland |
Wilmar International and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and Archer Daniels
The main advantage of trading using opposite Wilmar International and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Wilmar International vs. Archer Daniels Midland | Wilmar International vs. Tyson Foods | Wilmar International vs. MOWI ASA SPADR | Wilmar International vs. Mowi ASA |
| Archer Daniels vs. Tyson Foods | Archer Daniels vs. Wilmar International Limited | Archer Daniels vs. MOWI ASA SPADR | Archer Daniels 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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