Correlation Between BRF SA and National Beverage
Can any of the company-specific risk be diversified away by investing in both BRF SA and National Beverage 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 BRF SA and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRF SA and National Beverage Corp, you can compare the effects of market volatilities on BRF SA and National Beverage 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 BRF SA with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and National Beverage.
Diversification Opportunities for BRF SA and National Beverage
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRF and National is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and BRF SA 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 BRF SA are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of BRF SA i.e., BRF SA and National Beverage go up and down completely randomly.
Pair Corralation between BRF SA and National Beverage
Assuming the 90 days horizon BRF SA is expected to under-perform the National Beverage. In addition to that, BRF SA is 1.94 times more volatile than National Beverage Corp. It trades about -0.43 of its total potential returns per unit of risk. National Beverage Corp is currently generating about -0.35 per unit of volatility. If you would invest 4,480 in National Beverage Corp on October 12, 2024 and sell it today you would lose (360.00) from holding National Beverage Corp or give up 8.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRF SA vs. National Beverage Corp
Performance |
| Timeline |
| BRF SA |
| National Beverage Corp |
BRF SA and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRF SA and National Beverage
The main advantage of trading using opposite BRF SA and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRF SA position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| BRF SA vs. Thai Beverage Public | BRF SA vs. National Beverage Corp | BRF SA vs. Austevoll Seafood ASA | BRF SA vs. Apollo Investment Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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