Correlation Between G Willi and Diplomat Holdings

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

By analyzing existing cross correlation between G Willi Food International and Diplomat Holdings, you can compare the effects of market volatilities on G Willi and Diplomat Holdings 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 G Willi with a short position of Diplomat Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Willi and Diplomat Holdings.

Diversification Opportunities for G Willi and Diplomat Holdings

0.94

Correlation Coefficient

G Willi  Diplomat Holdings

Almost no diversification

The 3 months correlation between WILC and Diplomat is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding G Willi Food International and Diplomat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diplomat Holdings and G Willi 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 G Willi Food International are associated (or correlated) with Diplomat Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diplomat Holdings has no effect on the direction of G Willi i.e., G Willi and Diplomat Holdings go up and down completely randomly.

Pair Corralation between G Willi and Diplomat Holdings

Assuming the 90 days trading horizon G Willi is expected to generate 1.19 times less return on investment than Diplomat Holdings. In addition to that, G Willi is 1.03 times more volatile than Diplomat Holdings. It trades about 0.39 of its total potential returns per unit of risk. Diplomat Holdings is currently generating about 0.47 per unit of volatility. If you would invest  315,001  in Diplomat Holdings on September 15, 2024 and sell it today you would earn a total of  182,299  from holding Diplomat Holdings or generate 57.87% return on investment over 90 days.

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

G Willi Food International  vs.  Diplomat Holdings

G Willi Food

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in G Willi Food International are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, G Willi sustained solid returns over the last few months and may actually be approaching a breakup point.

Diplomat Holdings

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Diplomat Holdings are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Diplomat Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G Willi and Diplomat Holdings

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

The idea behind G Willi Food International and Diplomat Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.