Correlation Between Stellar and Wilmar International
Can any of the company-specific risk be diversified away by investing in both Stellar 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 Stellar and Wilmar International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Wilmar International Limited, you can compare the effects of market volatilities on Stellar 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 Stellar with a short position of Wilmar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Wilmar International.
Diversification Opportunities for Stellar and Wilmar International
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stellar and Wilmar is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and Stellar 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 Stellar 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 Stellar i.e., Stellar and Wilmar International go up and down completely randomly.
Pair Corralation between Stellar and Wilmar International
Assuming the 90 days trading horizon Stellar is expected to under-perform the Wilmar International. In addition to that, Stellar is 3.79 times more volatile than Wilmar International Limited. It trades about -0.03 of its total potential returns per unit of risk. Wilmar International Limited is currently generating about -0.04 per unit of volatility. If you would invest 218.00 in Wilmar International Limited on November 1, 2024 and sell it today you would lose (3.00) from holding Wilmar International Limited or give up 1.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Stellar vs. Wilmar International Limited
Performance |
| Timeline |
| Stellar |
| Wilmar International |
Stellar and Wilmar International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Wilmar International
The main advantage of trading using opposite Stellar and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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.The idea behind Stellar and Wilmar International Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Wilmar International vs. Archer Daniels Midland | Wilmar International vs. Tyson Foods | Wilmar International vs. MOWI ASA SPADR | Wilmar International vs. Mowi 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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