Correlation Between ASSOC BR and Wilh Wilhelmsen

Can any of the company-specific risk be diversified away by investing in both ASSOC BR and Wilh Wilhelmsen 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 ASSOC BR and Wilh Wilhelmsen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASSOC BR FOODS and Wilh Wilhelmsen Holding, you can compare the effects of market volatilities on ASSOC BR and Wilh Wilhelmsen 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 ASSOC BR with a short position of Wilh Wilhelmsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSOC BR and Wilh Wilhelmsen.

Diversification Opportunities for ASSOC BR and Wilh Wilhelmsen

-0.21

Correlation Coefficient

ASSOC BR  Wilh Wilhelmsen

Very good diversification

The 3 months correlation between ASSOC and Wilh is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ASSOC BR FOODS and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding and ASSOC BR 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 ASSOC BR FOODS are associated (or correlated) with Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of ASSOC BR i.e., ASSOC BR and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between ASSOC BR and Wilh Wilhelmsen

Assuming the 90 days trading horizon ASSOC BR FOODS is expected to under-perform the Wilh Wilhelmsen. But the stock apears to be less risky and, when comparing its historical volatility, ASSOC BR FOODS is 1.03 times less risky than Wilh Wilhelmsen. The stock trades about -0.12 of its potential returns per unit of risk. The Wilh Wilhelmsen Holding is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,250  in Wilh Wilhelmsen Holding on December 2, 2024 and sell it today you would lose (100.00) from holding Wilh Wilhelmsen Holding or give up 3.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ASSOC BR FOODS  vs.  Wilh Wilhelmsen Holding

ASSOC BR FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASSOC BR FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Wilh Wilhelmsen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ASSOC BR and Wilh Wilhelmsen

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

The idea behind ASSOC BR FOODS and Wilh Wilhelmsen Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.