Correlation Between United States and Wilmar International
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Wilmar International Limited, you can compare the effects of market volatilities on United States 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 United States with a short position of Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Wilmar International.
Diversification Opportunities for United States and Wilmar International
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Wilmar is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and United States 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 United States Steel 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 United States i.e., United States and Wilmar International go up and down completely randomly.
Pair Corralation between United States and Wilmar International
Assuming the 90 days trading horizon United States Steel is expected to generate 3.22 times more return on investment than Wilmar International. However, United States is 3.22 times more volatile than Wilmar International Limited. It trades about 0.15 of its potential returns per unit of risk. Wilmar International Limited is currently generating about 0.07 per unit of risk. If you would invest 3,517 in United States Steel on September 4, 2024 and sell it today you would earn a total of 336.00 from holding United States Steel or generate 9.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Wilmar International Limited
Performance |
| Timeline |
| United States Steel |
| Wilmar International |
United States and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Wilmar International
The main advantage of trading using opposite United States and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. GAMESTOP | United States vs. Digilife Technologies Limited | United States vs. GigaMedia | United States vs. HOCHSCHILD MINING |
| Wilmar International vs. Tianjin Capital Environmental | Wilmar International vs. Marie Brizard Wine | Wilmar International vs. United States Steel | Wilmar International vs. KINGBOARD CHEMICAL |
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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