Correlation Between Wilmar International and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Wilmar International and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural, you can compare the effects of market volatilities on Wilmar International and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and Australian Agricultural.
Diversification Opportunities for Wilmar International and Australian Agricultural
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wilmar and Australian is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International Limited and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Wilmar International i.e., Wilmar International and Australian Agricultural go up and down completely randomly.
Pair Corralation between Wilmar International and Australian Agricultural
Assuming the 90 days trading horizon Wilmar International Limited is expected to under-perform the Australian Agricultural. But the stock apears to be less risky and, when comparing its historical volatility, Wilmar International Limited is 2.69 times less risky than Australian Agricultural. The stock trades about -0.08 of its potential returns per unit of risk. The Australian Agricultural is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 83.00 in Australian Agricultural on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Australian Agricultural or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmar International Limited vs. Australian Agricultural
Performance |
| Timeline |
| Wilmar International |
| Australian Agricultural |
Wilmar International and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and Australian Agricultural
The main advantage of trading using opposite Wilmar International and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Wilmar International vs. GREENX METALS LTD | Wilmar International vs. Computershare Limited | Wilmar International vs. United Internet AG | Wilmar International vs. Chunghwa Telecom Co |
| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. SalMar 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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