Correlation Between Marfrig Global and HDFC Bank
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and HDFC Bank 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 HDFC Bank 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 HDFC Bank Limited, you can compare the effects of market volatilities on Marfrig Global and HDFC Bank 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 HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and HDFC Bank.
Diversification Opportunities for Marfrig Global and HDFC Bank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marfrig and HDFC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited 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 HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank Limited has no effect on the direction of Marfrig Global i.e., Marfrig Global and HDFC Bank go up and down completely randomly.
Pair Corralation between Marfrig Global and HDFC Bank
Assuming the 90 days trading horizon Marfrig Global Foods is expected to generate 1.05 times more return on investment than HDFC Bank. However, Marfrig Global is 1.05 times more volatile than HDFC Bank Limited. It trades about 0.15 of its potential returns per unit of risk. HDFC Bank Limited is currently generating about 0.06 per unit of risk. If you would invest 960.00 in Marfrig Global Foods on October 26, 2024 and sell it today you would earn a total of 604.00 from holding Marfrig Global Foods or generate 62.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. HDFC Bank Limited
Performance |
| Timeline |
| Marfrig Global Foods |
| HDFC Bank Limited |
Marfrig Global and HDFC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and HDFC Bank
The main advantage of trading using opposite Marfrig Global and HDFC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, HDFC Bank 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 HDFC Bank will offset losses from the drop in HDFC Bank's long position.| Marfrig Global vs. JBS SA | Marfrig Global vs. Minerva SA | Marfrig Global vs. BRF SA | Marfrig Global vs. Companhia Siderrgica Nacional |
| HDFC Bank vs. Marfrig Global Foods | HDFC Bank vs. Verizon Communications | HDFC Bank vs. Beyond Meat | HDFC Bank vs. Brpr Corporate Offices |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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