Correlation Between Wilmar International and Atlantic Sapphire

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

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

Diversification Opportunities for Wilmar International and Atlantic Sapphire

0.56

Correlation Coefficient

Wilmar International  Atlantic Sapphire

Very weak diversification

The 3 months correlation between Wilmar and Atlantic is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Atlantic Sapphire ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Sapphire ASA 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 are associated (or correlated) with Atlantic Sapphire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Sapphire ASA has no effect on the direction of Wilmar International i.e., Wilmar International and Atlantic Sapphire go up and down completely randomly.

Pair Corralation between Wilmar International and Atlantic Sapphire

Assuming the 90 days horizon Wilmar International is expected to under-perform the Atlantic Sapphire. But the pink sheet apears to be less risky and, when comparing its historical volatility, Wilmar International is 14.36 times less risky than Atlantic Sapphire. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Atlantic Sapphire ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Atlantic Sapphire ASA on October 7, 2024 and sell it today you would earn a total of  0.08  from holding Atlantic Sapphire ASA or generate 7.27% return on investment over 90 days.

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

Wilmar International  vs.  Atlantic Sapphire ASA

Wilmar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmar International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Atlantic Sapphire ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Wilmar International and Atlantic Sapphire

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

The idea behind Wilmar International and Atlantic Sapphire ASA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.