Correlation Between Wilmar International and Global Clean

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

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

Diversification Opportunities for Wilmar International and Global Clean

-0.77

Correlation Coefficient

Wilmar International  Global Clean

Pay attention - limited upside

The 3 months correlation between Wilmar and Global is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Global Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Clean Energy 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 Global Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Clean Energy has no effect on the direction of Wilmar International i.e., Wilmar International and Global Clean go up and down completely randomly.

Pair Corralation between Wilmar International and Global Clean

Assuming the 90 days horizon Wilmar International is expected to generate 0.17 times more return on investment than Global Clean. However, Wilmar International is 6.04 times less risky than Global Clean. It trades about 0.1 of its potential returns per unit of risk. Global Clean Energy is currently generating about -0.15 per unit of risk. If you would invest  2,284  in Wilmar International on December 29, 2024 and sell it today you would earn a total of  194.00  from holding Wilmar International or generate 8.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Wilmar International  vs.  Global Clean Energy

Wilmar International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmar International are ranked lower than 7 (%) 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.

Global Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Wilmar International and Global Clean

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

The idea behind Wilmar International and Global Clean Energy 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.