Correlation Between Marfrig Global and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and WuXi AppTec 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 WuXi AppTec 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 WuXi AppTec Co, you can compare the effects of market volatilities on Marfrig Global and WuXi AppTec 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 WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and WuXi AppTec.
Diversification Opportunities for Marfrig Global and WuXi AppTec
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Marfrig and WuXi is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec 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 WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Marfrig Global i.e., Marfrig Global and WuXi AppTec go up and down completely randomly.
Pair Corralation between Marfrig Global and WuXi AppTec
Assuming the 90 days horizon Marfrig Global Foods is expected to generate 0.7 times more return on investment than WuXi AppTec. However, Marfrig Global Foods is 1.43 times less risky than WuXi AppTec. It trades about 0.06 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.02 per unit of risk. If you would invest 135.00 in Marfrig Global Foods on December 9, 2024 and sell it today you would earn a total of 123.00 from holding Marfrig Global Foods or generate 91.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. WuXi AppTec Co
Performance |
| Timeline |
| Marfrig Global Foods |
| WuXi AppTec |
Marfrig Global and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and WuXi AppTec
The main advantage of trading using opposite Marfrig Global and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.| Marfrig Global vs. BRF SA ADR | ||
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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