Correlation Between Elco and G Willi

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

By analyzing existing cross correlation between Elco and G Willi Food International, you can compare the effects of market volatilities on Elco and G Willi 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 Elco with a short position of G Willi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elco and G Willi.

Diversification Opportunities for Elco and G Willi

0.29

Correlation Coefficient

Elco  G Willi

Modest diversification

The 3 months correlation between Elco and WILC is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Elco and G Willi Food International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Willi Food and Elco 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 Elco are associated (or correlated) with G Willi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Willi Food has no effect on the direction of Elco i.e., Elco and G Willi go up and down completely randomly.

Pair Corralation between Elco and G Willi

Assuming the 90 days trading horizon Elco is expected to under-perform the G Willi. In addition to that, Elco is 1.6 times more volatile than G Willi Food International. It trades about -0.02 of its total potential returns per unit of risk. G Willi Food International is currently generating about 0.02 per unit of volatility. If you would invest  573,480  in G Willi Food International on December 28, 2024 and sell it today you would earn a total of  7,020  from holding G Willi Food International or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.08%
Values	Daily Returns

Elco  vs.  G Willi Food International

Elco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Elco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

G Willi Food

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in G Willi Food International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, G Willi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elco and G Willi

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

The idea behind Elco and G Willi Food International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.