Correlation Between Wilmar International and A2 Milk
Can any of the company-specific risk be diversified away by investing in both Wilmar International and A2 Milk 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 A2 Milk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar International and The A2 Milk, you can compare the effects of market volatilities on Wilmar International and A2 Milk 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 A2 Milk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and A2 Milk.
Diversification Opportunities for Wilmar International and A2 Milk
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wilmar and ACOPY is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and The A2 Milk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A2 Milk 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 are associated (or correlated) with A2 Milk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A2 Milk has no effect on the direction of Wilmar International i.e., Wilmar International and A2 Milk go up and down completely randomly.
Pair Corralation between Wilmar International and A2 Milk
Assuming the 90 days horizon Wilmar International is expected to generate 2.38 times more return on investment than A2 Milk. However, Wilmar International is 2.38 times more volatile than The A2 Milk. It trades about 0.23 of its potential returns per unit of risk. The A2 Milk is currently generating about -0.19 per unit of risk. If you would invest 2,218 in Wilmar International on October 21, 2024 and sell it today you would earn a total of 124.00 from holding Wilmar International or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Wilmar International vs. The A2 Milk
Performance |
| Timeline |
| Wilmar International |
| A2 Milk |
Wilmar International and A2 Milk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and A2 Milk
The main advantage of trading using opposite Wilmar International and A2 Milk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, A2 Milk 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 A2 Milk will offset losses from the drop in A2 Milk's long position.| Wilmar International vs. Wilmar International Limited | Wilmar International vs. Wesfarmers Ltd ADR | Wilmar International vs. United Overseas Bank | Wilmar International vs. Kerry Group PLC |
| A2 Milk vs. Avi Ltd ADR | A2 Milk vs. Altavoz Entertainment | A2 Milk vs. The a2 Milk | A2 Milk vs. Aryzta AG PK |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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