Correlation Between Wilmar International and Golden Agri-Resources
Can any of the company-specific risk be diversified away by investing in both Wilmar International and Golden Agri-Resources 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 Golden Agri-Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar International and Golden Agri Resources, you can compare the effects of market volatilities on Wilmar International and Golden Agri-Resources 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 Golden Agri-Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and Golden Agri-Resources.
Diversification Opportunities for Wilmar International and Golden Agri-Resources
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wilmar and Golden is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources 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 Golden Agri-Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of Wilmar International i.e., Wilmar International and Golden Agri-Resources go up and down completely randomly.
Pair Corralation between Wilmar International and Golden Agri-Resources
Assuming the 90 days horizon Wilmar International is expected to generate 73.79 times less return on investment than Golden Agri-Resources. But when comparing it to its historical volatility, Wilmar International is 8.62 times less risky than Golden Agri-Resources. It trades about 0.04 of its potential returns per unit of risk. Golden Agri Resources is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Golden Agri Resources on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Golden Agri Resources or generate 76.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmar International vs. Golden Agri Resources
Performance |
| Timeline |
| Wilmar International |
| Golden Agri Resources |
Wilmar International and Golden Agri-Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and Golden Agri-Resources
The main advantage of trading using opposite Wilmar International and Golden Agri-Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, Golden Agri-Resources 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 Golden Agri-Resources will offset losses from the drop in Golden Agri-Resources' 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 |
| Golden Agri-Resources vs. Wilmar International | Golden Agri-Resources vs. SLC Agricola SA | Golden Agri-Resources vs. Brasilagro Adr | Golden Agri-Resources vs. Alico Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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