Correlation Between Arch Resources and GWILLI FOOD

Can any of the company-specific risk be diversified away by investing in both Arch Resources and GWILLI FOOD 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 Arch Resources and GWILLI FOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arch Resources and GWILLI FOOD, you can compare the effects of market volatilities on Arch Resources and GWILLI FOOD 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 Arch Resources with a short position of GWILLI FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Resources and GWILLI FOOD.

Diversification Opportunities for Arch Resources and GWILLI FOOD

0.3

Correlation Coefficient

Arch Resources  GWILLI FOOD

Weak diversification

The 3 months correlation between Arch and GWILLI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arch Resources and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD and Arch Resources 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 Arch Resources are associated (or correlated) with GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Arch Resources i.e., Arch Resources and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Arch Resources and GWILLI FOOD

If you would invest  1,550  in GWILLI FOOD on October 26, 2024 and sell it today you would earn a total of  10.00  from holding GWILLI FOOD or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Arch Resources  vs.  GWILLI FOOD

Arch Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arch Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arch Resources is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GWILLI FOOD

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arch Resources and GWILLI FOOD

The main advantage of trading using opposite Arch Resources and GWILLI FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Resources position performs unexpectedly, GWILLI FOOD 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 GWILLI FOOD will offset losses from the drop in GWILLI FOOD's long position.

The idea behind Arch Resources and GWILLI FOOD 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.

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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.