Correlation Between Marfrig Global and Ark Restaurants

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

Diversification Opportunities for Marfrig Global and Ark Restaurants

0.01

Correlation Coefficient

Marfrig Global  Ark Restaurants

Significant diversification

The 3 months correlation between Marfrig and Ark is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Marfrig Global i.e., Marfrig Global and Ark Restaurants go up and down completely randomly.

Pair Corralation between Marfrig Global and Ark Restaurants

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.07 times more return on investment than Ark Restaurants. However, Marfrig Global is 1.07 times more volatile than Ark Restaurants Corp. It trades about 0.06 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about -0.02 per unit of risk. If you would invest  129.00  in Marfrig Global Foods on December 3, 2024 and sell it today you would earn a total of  151.00  from holding Marfrig Global Foods or generate 117.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Marfrig Global Foods  vs.  Ark Restaurants Corp

Marfrig Global Foods

Risk-Adjusted Performance

Very Weak

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

Ark Restaurants Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking signals, Ark Restaurants reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marfrig Global and Ark Restaurants

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

The idea behind Marfrig Global Foods and Ark Restaurants Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.