Correlation Between Wilmar International and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Wilmar International and SalMar ASA 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 SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar International and SalMar ASA, you can compare the effects of market volatilities on Wilmar International and SalMar ASA 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and SalMar ASA.
Diversification Opportunities for Wilmar International and SalMar ASA
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wilmar and SalMar is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Wilmar International i.e., Wilmar International and SalMar ASA go up and down completely randomly.
Pair Corralation between Wilmar International and SalMar ASA
Assuming the 90 days horizon Wilmar International is expected to generate 7.97 times less return on investment than SalMar ASA. But when comparing it to its historical volatility, Wilmar International is 3.03 times less risky than SalMar ASA. It trades about 0.04 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,195 in SalMar ASA on November 2, 2024 and sell it today you would earn a total of 89.00 from holding SalMar ASA or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmar International vs. SalMar ASA
Performance |
| Timeline |
| Wilmar International |
| SalMar ASA |
Wilmar International and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar International and SalMar ASA
The main advantage of trading using opposite Wilmar International and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA'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 |
| SalMar ASA vs. SLC Agricola SA | SalMar ASA vs. Cal Maine Foods | SalMar ASA vs. Bunge Limited | SalMar ASA vs. Austevoll Seafood ASA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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