Correlation Between Companhia Siderrgica and Marfrig Global

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

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

Diversification Opportunities for Companhia Siderrgica and Marfrig Global

-0.27

Correlation Coefficient

Companhia Siderrgica  Marfrig Global

Very good diversification

The 3 months correlation between Companhia and Marfrig is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderrgica Nacional 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 Companhia Siderrgica 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 Companhia Siderrgica Nacional 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 Companhia Siderrgica i.e., Companhia Siderrgica and Marfrig Global go up and down completely randomly.

Pair Corralation between Companhia Siderrgica and Marfrig Global

Assuming the 90 days trading horizon Companhia Siderrgica is expected to generate 5.53 times less return on investment than Marfrig Global. In addition to that, Companhia Siderrgica is 1.21 times more volatile than Marfrig Global Foods. It trades about 0.03 of its total potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.22 per unit of volatility. If you would invest  1,367  in Marfrig Global Foods on September 3, 2024 and sell it today you would earn a total of  510.00  from holding Marfrig Global Foods or generate 37.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Companhia Siderrgica Nacional  vs.  Marfrig Global Foods

Companhia Siderrgica

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Companhia Siderrgica Nacional are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Companhia Siderrgica is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Marfrig Global Foods

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marfrig Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Companhia Siderrgica and Marfrig Global

The main advantage of trading using opposite Companhia Siderrgica and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderrgica 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 Companhia Siderrgica Nacional 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.