Correlation Between Wilmar International and MOWI ASA
Can any of the company-specific risk be diversified away by investing in both Wilmar International and MOWI ASA 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 MOWI ASA 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 MOWI ASA SPADR, you can compare the effects of market volatilities on Wilmar International and MOWI ASA 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 MOWI ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and MOWI ASA.
Diversification Opportunities for Wilmar International and MOWI ASA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wilmar and MOWI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International Limited and MOWI ASA SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOWI ASA SPADR 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 MOWI ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOWI ASA SPADR has no effect on the direction of Wilmar International i.e., Wilmar International and MOWI ASA go up and down completely randomly.
Pair Corralation between Wilmar International and MOWI ASA
Assuming the 90 days trading horizon Wilmar International Limited is expected to generate 1.42 times more return on investment than MOWI ASA. However, Wilmar International is 1.42 times more volatile than MOWI ASA SPADR. It trades about -0.02 of its potential returns per unit of risk. MOWI ASA SPADR is currently generating about -0.27 per unit of risk. If you would invest 217.00 in Wilmar International Limited on September 24, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmar International Limited vs. MOWI ASA SPADR
Performance |
| Timeline |
| Wilmar International |
| MOWI ASA SPADR |
Wilmar International and MOWI ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and MOWI ASA
The main advantage of trading using opposite Wilmar International and MOWI ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, MOWI ASA 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 MOWI ASA will offset losses from the drop in MOWI ASA's long position.| Wilmar International vs. Archer Daniels Midland | Wilmar International vs. Tyson Foods | Wilmar International vs. MOWI ASA SPADR | Wilmar International vs. Mowi ASA |
| MOWI ASA vs. Archer Daniels Midland | MOWI ASA vs. Tyson Foods | MOWI ASA vs. Wilmar International Limited | MOWI ASA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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