Correlation Between Wilmar International and BJs Wholesale

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Can any of the company-specific risk be diversified away by investing in both Wilmar International and BJs Wholesale 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 Wilmar International and BJs Wholesale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar International Limited and BJs Wholesale Club, you can compare the effects of market volatilities on Wilmar International and BJs Wholesale 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 Wilmar International with a short position of BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar International and BJs Wholesale.

Diversification Opportunities for Wilmar International and BJs Wholesale

WilmarBJsDiversified AwayWilmarBJsDiversified Away100%
-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Wilmar and BJs is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International Limited and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club and Wilmar International 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 Wilmar International Limited are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Wilmar International i.e., Wilmar International and BJs Wholesale go up and down completely randomly.

Pair Corralation between Wilmar International and BJs Wholesale

Assuming the 90 days trading horizon Wilmar International is expected to generate 28.01 times less return on investment than BJs Wholesale. In addition to that, Wilmar International is 1.23 times more volatile than BJs Wholesale Club. It trades about 0.01 of its total potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.24 per unit of volatility. If you would invest  7,250  in BJs Wholesale Club on September 15, 2024 and sell it today you would earn a total of  2,100  from holding BJs Wholesale Club or generate 28.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Wilmar International Limited  vs.  BJs Wholesale Club

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 0510152025
JavaScript chart by amCharts 3.21.15RTHA 8BJ
       Timeline  
Wilmar International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Wilmar International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Wilmar International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.12.152.22.252.32.352.4
BJs Wholesale Club 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7580859095

Wilmar International and BJs Wholesale Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.65-4.98-3.31-1.640.01.593.274.956.638.31 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15RTHA 8BJ
       Returns  

Pair Trading with Wilmar International and BJs Wholesale

The main advantage of trading using opposite Wilmar International and BJs Wholesale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International position performs unexpectedly, BJs Wholesale 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 BJs Wholesale will offset losses from the drop in BJs Wholesale's long position.
The idea behind Wilmar International Limited and BJs Wholesale Club 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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