Correlation Between Wilmar International and Adecoagro

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

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

Diversification Opportunities for Wilmar International and Adecoagro

0.7

Correlation Coefficient

Wilmar International  Adecoagro

Poor diversification

The 3 months correlation between Wilmar and Adecoagro is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Adecoagro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecoagro SA 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 Adecoagro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecoagro SA has no effect on the direction of Wilmar International i.e., Wilmar International and Adecoagro go up and down completely randomly.

Pair Corralation between Wilmar International and Adecoagro

Assuming the 90 days horizon Wilmar International is expected to generate 1.77 times less return on investment than Adecoagro. But when comparing it to its historical volatility, Wilmar International is 1.3 times less risky than Adecoagro. It trades about 0.11 of its potential returns per unit of risk. Adecoagro SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  947.00  in Adecoagro SA on December 27, 2024 and sell it today you would earn a total of  168.00  from holding Adecoagro SA or generate 17.74% return on investment over 90 days.

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

Wilmar International  vs.  Adecoagro SA

Wilmar International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmar International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Wilmar International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Adecoagro SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adecoagro SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Adecoagro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilmar International and Adecoagro

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

The idea behind Wilmar International and Adecoagro SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.