Correlation Between Wilmington Capital and Asiabasemetals

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

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

Diversification Opportunities for Wilmington Capital and Asiabasemetals

0.36

Correlation Coefficient

Wilmington Capital  Asiabasemetals

Weak diversification

The 3 months correlation between Wilmington and Asiabasemetals is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Asiabasemetals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiabasemetals and Wilmington Capital 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 Wilmington Capital Management are associated (or correlated) with Asiabasemetals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiabasemetals has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Asiabasemetals go up and down completely randomly.

Pair Corralation between Wilmington Capital and Asiabasemetals

Assuming the 90 days trading horizon Wilmington Capital Management is expected to under-perform the Asiabasemetals. But the stock apears to be less risky and, when comparing its historical volatility, Wilmington Capital Management is 4.07 times less risky than Asiabasemetals. The stock trades about -0.07 of its potential returns per unit of risk. The Asiabasemetals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Asiabasemetals on September 14, 2024 and sell it today you would lose (1.00) from holding Asiabasemetals or give up 11.11% of portfolio value over 90 days.

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

Wilmington Capital Management  vs.  Asiabasemetals

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Asiabasemetals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asiabasemetals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Asiabasemetals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilmington Capital and Asiabasemetals

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

The idea behind Wilmington Capital Management and Asiabasemetals 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.