Correlation Between Wilmar International and Singapore Exchange

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

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

Diversification Opportunities for Wilmar International and Singapore Exchange

0.25

Correlation Coefficient

Wilmar International  Singapore Exchange

Modest diversification

The 3 months correlation between Wilmar and Singapore is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International and Singapore Exchange Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Exchange 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 Singapore Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Exchange has no effect on the direction of Wilmar International i.e., Wilmar International and Singapore Exchange go up and down completely randomly.

Pair Corralation between Wilmar International and Singapore Exchange

Assuming the 90 days horizon Wilmar International is expected to under-perform the Singapore Exchange. In addition to that, Wilmar International is 1.43 times more volatile than Singapore Exchange Ltd. It trades about -0.12 of its total potential returns per unit of risk. Singapore Exchange Ltd is currently generating about 0.0 per unit of volatility. If you would invest  1,841  in Singapore Exchange Ltd on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Singapore Exchange Ltd or generate 0.0% return on investment over 90 days.

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

Wilmar International  vs.  Singapore Exchange Ltd

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 fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Singapore Exchange

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Exchange Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Singapore Exchange showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilmar International and Singapore Exchange

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

The idea behind Wilmar International and Singapore Exchange Ltd 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.