Correlation Between ITALIAN WINE and Wilmar International

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

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

Diversification Opportunities for ITALIAN WINE and Wilmar International

-0.2

Correlation Coefficient

ITALIAN WINE  Wilmar International

Good diversification

The 3 months correlation between ITALIAN and Wilmar is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and Wilmar International go up and down completely randomly.

Pair Corralation between ITALIAN WINE and Wilmar International

Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to generate 1.74 times more return on investment than Wilmar International. However, ITALIAN WINE is 1.74 times more volatile than Wilmar International Limited. It trades about 0.1 of its potential returns per unit of risk. Wilmar International Limited is currently generating about -0.07 per unit of risk. If you would invest  2,080  in ITALIAN WINE BRANDS on October 4, 2024 and sell it today you would earn a total of  320.00  from holding ITALIAN WINE BRANDS or generate 15.38% return on investment over 90 days.

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

ITALIAN WINE BRANDS  vs.  Wilmar International Limited

ITALIAN WINE BRANDS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ITALIAN WINE BRANDS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ITALIAN WINE reported solid returns over the last few months and may actually be approaching a breakup point.

Wilmar International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ITALIAN WINE and Wilmar International

The main advantage of trading using opposite ITALIAN WINE and Wilmar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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 ITALIAN WINE BRANDS and Wilmar International Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.