Correlation Between Wilmar International and Minerva SA

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

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

Diversification Opportunities for Wilmar International and Minerva SA

0.61

Correlation Coefficient

Wilmar International  Minerva SA

Poor diversification

The 3 months correlation between Wilmar and Minerva is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Minerva SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva 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 Minerva SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva SA has no effect on the direction of Wilmar International i.e., Wilmar International and Minerva SA go up and down completely randomly.

Pair Corralation between Wilmar International and Minerva SA

Assuming the 90 days horizon Wilmar International is expected to under-perform the Minerva SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, Wilmar International is 2.9 times less risky than Minerva SA. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Minerva SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  380.00  in Minerva SA on September 13, 2024 and sell it today you would earn a total of  42.00  from holding Minerva SA or generate 11.05% 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.  Minerva SA

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.

Minerva SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minerva SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Minerva SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wilmar International and Minerva SA

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

The idea behind Wilmar International and Minerva 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .