Correlation Between Wilmar International and SLC Agricola

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

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

Diversification Opportunities for Wilmar International and SLC Agricola

0.51

Correlation Coefficient

Wilmar International  SLC Agricola

Very weak diversification

The 3 months correlation between Wilmar and SLC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and SLC Agricola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agricola 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 SLC Agricola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agricola SA has no effect on the direction of Wilmar International i.e., Wilmar International and SLC Agricola go up and down completely randomly.

Pair Corralation between Wilmar International and SLC Agricola

Assuming the 90 days horizon Wilmar International is expected to generate 3.04 times less return on investment than SLC Agricola. But when comparing it to its historical volatility, Wilmar International is 1.87 times less risky than SLC Agricola. It trades about 0.03 of its potential returns per unit of risk. SLC Agricola SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  297.00  in SLC Agricola SA on December 1, 2024 and sell it today you would earn a total of  20.00  from holding SLC Agricola SA or generate 6.73% 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.  SLC Agricola SA

Wilmar International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmar International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

SLC Agricola SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SLC Agricola SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, SLC Agricola may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wilmar International and SLC Agricola

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

The idea behind Wilmar International and SLC Agricola 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.