Correlation Between Marfrig Global and Cebu Air
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Cebu Air 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 Cebu Air 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 Cebu Air ADR, you can compare the effects of market volatilities on Marfrig Global and Cebu Air 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 Cebu Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Cebu Air.
Diversification Opportunities for Marfrig Global and Cebu Air
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Marfrig and Cebu is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Cebu Air ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cebu Air ADR 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 Cebu Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cebu Air ADR has no effect on the direction of Marfrig Global i.e., Marfrig Global and Cebu Air go up and down completely randomly.
Pair Corralation between Marfrig Global and Cebu Air
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.12 times more return on investment than Cebu Air. However, Marfrig Global is 1.12 times more volatile than Cebu Air ADR. It trades about 0.26 of its potential returns per unit of risk. Cebu Air ADR is currently generating about -0.21 per unit of risk. If you would invest 260.00 in Marfrig Global Foods on August 31, 2024 and sell it today you would earn a total of 50.00 from holding Marfrig Global Foods or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. Cebu Air ADR
Performance |
| Timeline |
| Marfrig Global Foods |
| Cebu Air ADR |
Marfrig Global and Cebu Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Cebu Air
The main advantage of trading using opposite Marfrig Global and Cebu Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Cebu Air 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 Cebu Air will offset losses from the drop in Cebu Air's long position.| Marfrig Global vs. The A2 Milk | Marfrig Global vs. Altavoz Entertainment | Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. General Mills |
| Cebu Air vs. Olympic Steel | Cebu Air vs. Insteel Industries | Cebu Air vs. CECO Environmental Corp | Cebu Air vs. Western Union Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |