Correlation Between Wilmar International and GrainCorp
Can any of the company-specific risk be diversified away by investing in both Wilmar International and GrainCorp 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 GrainCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar International and GrainCorp Limited, you can compare the effects of market volatilities on Wilmar International and GrainCorp 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 GrainCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and GrainCorp.
Diversification Opportunities for Wilmar International and GrainCorp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wilmar and GrainCorp is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and GrainCorp Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrainCorp Limited 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 GrainCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrainCorp Limited has no effect on the direction of Wilmar International i.e., Wilmar International and GrainCorp go up and down completely randomly.
Pair Corralation between Wilmar International and GrainCorp
Assuming the 90 days horizon Wilmar International is expected to generate 0.38 times more return on investment than GrainCorp. However, Wilmar International is 2.66 times less risky than GrainCorp. It trades about 0.04 of its potential returns per unit of risk. GrainCorp Limited is currently generating about -0.12 per unit of risk. If you would invest 2,249 in Wilmar International on November 2, 2024 and sell it today you would earn a total of 21.00 from holding Wilmar International or generate 0.93% 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. GrainCorp Limited
Performance |
| Timeline |
| Wilmar International |
| GrainCorp Limited |
Wilmar International and GrainCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and GrainCorp
The main advantage of trading using opposite Wilmar International and GrainCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, GrainCorp 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 GrainCorp will offset losses from the drop in GrainCorp'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 |
| GrainCorp vs. Australian Agricultural | GrainCorp vs. Forafric Global PLC | GrainCorp vs. Forafric Global 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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