Correlation Between SW Seed and Wilmar International
Can any of the company-specific risk be diversified away by investing in both SW Seed 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 SW Seed and Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SW Seed Company and Wilmar International, you can compare the effects of market volatilities on SW Seed 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 SW Seed with a short position of Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SW Seed and Wilmar International.
Diversification Opportunities for SW Seed and Wilmar International
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SANW and Wilmar is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SW Seed Company and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and SW Seed 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 SW Seed Company 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 SW Seed i.e., SW Seed and Wilmar International go up and down completely randomly.
Pair Corralation between SW Seed and Wilmar International
Given the investment horizon of 90 days SW Seed Company is expected to generate 5.77 times more return on investment than Wilmar International. However, SW Seed is 5.77 times more volatile than Wilmar International. It trades about 0.15 of its potential returns per unit of risk. Wilmar International is currently generating about 0.04 per unit of risk. If you would invest 762.00 in SW Seed Company on November 2, 2024 and sell it today you would earn a total of 146.00 from holding SW Seed Company or generate 19.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SW Seed Company vs. Wilmar International
Performance |
| Timeline |
| SW Seed Company |
| Wilmar International |
SW Seed and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SW Seed and Wilmar International
The main advantage of trading using opposite SW Seed and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SW Seed 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 SW Seed Company and Wilmar International 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. 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |