Correlation Between Marfrig Global and Distoken Acquisition

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

Diversification Opportunities for Marfrig Global and Distoken Acquisition

0.07

Correlation Coefficient

Marfrig Global  Distoken Acquisition

Significant diversification

The 3 months correlation between Marfrig and Distoken is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Marfrig Global i.e., Marfrig Global and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Marfrig Global and Distoken Acquisition

Assuming the 90 days horizon Marfrig Global Foods is expected to under-perform the Distoken Acquisition. In addition to that, Marfrig Global is 3.43 times more volatile than Distoken Acquisition. It trades about -0.05 of its total potential returns per unit of risk. Distoken Acquisition is currently generating about 0.0 per unit of volatility. If you would invest  1,115  in Distoken Acquisition on December 4, 2024 and sell it today you would lose (4.00) from holding Distoken Acquisition or give up 0.36% of portfolio value over 90 days.

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

Marfrig Global Foods  vs.  Distoken Acquisition

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Distoken Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Distoken Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marfrig Global and Distoken Acquisition

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

The idea behind Marfrig Global Foods and Distoken Acquisition 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.