Correlation Between Alico and Wilmar International

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

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

Diversification Opportunities for Alico and Wilmar International

0.03

Correlation Coefficient

Alico  Wilmar International

Significant diversification

The 3 months correlation between Alico and Wilmar is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alico Inc and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International and Alico 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 Alico Inc are associated (or correlated) with Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Alico i.e., Alico and Wilmar International go up and down completely randomly.

Pair Corralation between Alico and Wilmar International

Given the investment horizon of 90 days Alico Inc is expected to generate 0.48 times more return on investment than Wilmar International. However, Alico Inc is 2.1 times less risky than Wilmar International. It trades about 0.01 of its potential returns per unit of risk. Wilmar International Limited is currently generating about 0.0 per unit of risk. If you would invest  2,727  in Alico Inc on September 3, 2024 and sell it today you would lose (47.00) from holding Alico Inc or give up 1.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	77.37%
Values	Daily Returns

Alico Inc  vs.  Wilmar International Limited

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.

Wilmar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmar International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Wilmar International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alico and Wilmar International

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

The idea behind Alico Inc and Wilmar International Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.