Correlation Between InMode and Wilmar International

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

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

Diversification Opportunities for InMode and Wilmar International

0.55

Correlation Coefficient

InMode  Wilmar International

Very weak diversification

The 3 months correlation between InMode and Wilmar is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Wilmar International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and InMode 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 InMode 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 InMode i.e., InMode and Wilmar International go up and down completely randomly.

Pair Corralation between InMode and Wilmar International

Given the investment horizon of 90 days InMode is expected to generate 1.02 times more return on investment than Wilmar International. However, InMode is 1.02 times more volatile than Wilmar International. It trades about 0.33 of its potential returns per unit of risk. Wilmar International is currently generating about 0.15 per unit of risk. If you would invest  1,667  in InMode on December 4, 2024 and sell it today you would earn a total of  222.00  from holding InMode or generate 13.32% return on investment over 90 days.

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

InMode  vs.  Wilmar International

InMode

Risk-Adjusted Performance

Very Weak

Over the last 90 days InMode has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Wilmar International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmar International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Wilmar International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with InMode and Wilmar International

The main advantage of trading using opposite InMode and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InMode 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 InMode and Wilmar 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.