Correlation Between Lendlease and GWILLI FOOD

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

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

Diversification Opportunities for Lendlease and GWILLI FOOD

0.61

Correlation Coefficient

Lendlease  GWILLI FOOD

Poor diversification

The 3 months correlation between Lendlease and GWILLI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Lendlease and GWILLI FOOD

Assuming the 90 days trading horizon Lendlease Group is expected to generate 0.82 times more return on investment than GWILLI FOOD. However, Lendlease Group is 1.22 times less risky than GWILLI FOOD. It trades about -0.03 of its potential returns per unit of risk. GWILLI FOOD is currently generating about -0.04 per unit of risk. If you would invest  365.00  in Lendlease Group on December 22, 2024 and sell it today you would lose (12.00) from holding Lendlease Group or give up 3.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Lendlease Group  vs.  GWILLI FOOD

Lendlease Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lendlease Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lendlease 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

Very Weak

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

Pair Trading with Lendlease and GWILLI FOOD

The main advantage of trading using opposite Lendlease and GWILLI FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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 Lendlease Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.