Correlation Between Wilmar International and Alico

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

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

Diversification Opportunities for Wilmar International and Alico

0.19

Correlation Coefficient

Wilmar International  Alico

Average diversification

The 3 months correlation between Wilmar and Alico is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Alico Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alico Inc 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 Alico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alico Inc has no effect on the direction of Wilmar International i.e., Wilmar International and Alico go up and down completely randomly.

Pair Corralation between Wilmar International and Alico

Assuming the 90 days horizon Wilmar International is expected to generate 0.96 times more return on investment than Alico. However, Wilmar International is 1.04 times less risky than Alico. It trades about -0.01 of its potential returns per unit of risk. Alico Inc is currently generating about -0.03 per unit of risk. If you would invest  2,383  in Wilmar International on September 3, 2024 and sell it today you would lose (80.00) from holding Wilmar International or give up 3.36% of portfolio value over 90 days.

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

Wilmar International  vs.  Alico Inc

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 fairly strong forward indicators, Wilmar International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alico Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alico Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Alico is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wilmar International and Alico

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

The idea behind Wilmar International and Alico Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.