Correlation Between Asure Software and Marfrig Global

Can any of the company-specific risk be diversified away by investing in both Asure Software and Marfrig Global 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 Asure Software and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asure Software and Marfrig Global Foods, you can compare the effects of market volatilities on Asure Software and Marfrig Global 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 Asure Software with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asure Software and Marfrig Global.

Diversification Opportunities for Asure Software and Marfrig Global

0.41

Correlation Coefficient

Asure Software  Marfrig Global

Very weak diversification

The 3 months correlation between Asure and Marfrig is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Asure Software and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and Asure Software 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 Asure Software are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Asure Software i.e., Asure Software and Marfrig Global go up and down completely randomly.

Pair Corralation between Asure Software and Marfrig Global

Given the investment horizon of 90 days Asure Software is expected to generate 1.51 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Asure Software is 1.24 times less risky than Marfrig Global. It trades about 0.1 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Marfrig Global Foods on August 10, 2024 and sell it today you would earn a total of  58.00  from holding Marfrig Global Foods or generate 26.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Asure Software  vs.  Marfrig Global Foods

Asure Software

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Asure Software reported solid returns over the last few months and may actually be approaching a breakup point.

Marfrig Global Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asure Software and Marfrig Global

The main advantage of trading using opposite Asure Software and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asure Software position performs unexpectedly, Marfrig Global 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 Marfrig Global will offset losses from the drop in Marfrig Global's long position.

The idea behind Asure Software and Marfrig Global Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.