Correlation Between Marfrig Global and Nichirei

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Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Nichirei 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 Nichirei 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 Nichirei, you can compare the effects of market volatilities on Marfrig Global and Nichirei 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 Nichirei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Nichirei.

Diversification Opportunities for Marfrig Global and Nichirei

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Marfrig and Nichirei is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Nichirei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nichirei 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 Nichirei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nichirei has no effect on the direction of Marfrig Global i.e., Marfrig Global and Nichirei go up and down completely randomly.

Pair Corralation between Marfrig Global and Nichirei

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 4.77 times more return on investment than Nichirei. However, Marfrig Global is 4.77 times more volatile than Nichirei. It trades about 0.07 of its potential returns per unit of risk. Nichirei is currently generating about 0.12 per unit of risk. If you would invest  178.00  in Marfrig Global Foods on February 21, 2024 and sell it today you would earn a total of  41.00  from holding Marfrig Global Foods or generate 23.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Marfrig Global Foods  vs.  Nichirei

 Performance 
       Timeline  
Marfrig Global Foods 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 10 (%) 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.
Nichirei 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nichirei has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nichirei is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Marfrig Global and Nichirei Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marfrig Global and Nichirei

The main advantage of trading using opposite Marfrig Global and Nichirei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Nichirei 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 Nichirei will offset losses from the drop in Nichirei's long position.
The idea behind Marfrig Global Foods and Nichirei 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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