Correlation Between Marfrig Global and Balchem
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Balchem 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 Balchem 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 Balchem, you can compare the effects of market volatilities on Marfrig Global and Balchem 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 Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Balchem.
Diversification Opportunities for Marfrig Global and Balchem
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marfrig and Balchem is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Marfrig Global i.e., Marfrig Global and Balchem go up and down completely randomly.
Pair Corralation between Marfrig Global and Balchem
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.9 times more return on investment than Balchem. However, Marfrig Global is 1.9 times more volatile than Balchem. It trades about 0.24 of its potential returns per unit of risk. Balchem is currently generating about 0.21 per unit of risk. If you would invest 244.00 in Marfrig Global Foods on August 24, 2024 and sell it today you would earn a total of 41.00 from holding Marfrig Global Foods or generate 16.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Marfrig Global Foods vs. Balchem
Performance |
| Timeline |
| Marfrig Global Foods |
| Balchem |
Marfrig Global and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Balchem
The main advantage of trading using opposite Marfrig Global and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. Avi Ltd ADR | Marfrig Global vs. Aryzta AG PK | Marfrig Global vs. The A2 Milk |
| Balchem vs. Eshallgo Class A | Balchem vs. Amtech Systems | Balchem vs. Gold Fields Ltd | Balchem vs. Aegean Airlines SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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