Correlation Between Marfrig Global and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Companhia Siderrgica 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 Marfrig Global and Companhia Siderrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Marfrig Global and Companhia Siderrgica 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 Marfrig Global with a short position of Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Companhia Siderrgica.
Diversification Opportunities for Marfrig Global and Companhia Siderrgica
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marfrig and Companhia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Marfrig Global i.e., Marfrig Global and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Marfrig Global and Companhia Siderrgica
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.18 times more return on investment than Companhia Siderrgica. However, Marfrig Global is 1.18 times more volatile than Companhia Siderrgica Nacional. It trades about 0.12 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.04 per unit of risk. If you would invest 929.00 in Marfrig Global Foods on September 2, 2024 and sell it today you would earn a total of 948.00 from holding Marfrig Global Foods or generate 102.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Marfrig Global Foods vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Marfrig Global Foods |
| Companhia Siderrgica |
Marfrig Global and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Companhia Siderrgica
The main advantage of trading using opposite Marfrig Global and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Marfrig Global vs. Companhia Siderrgica Nacional | Marfrig Global vs. Cyrela Brazil Realty | Marfrig Global vs. Fras le SA | Marfrig Global vs. Energisa SA |
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Check out your portfolio center.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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