Correlation Between Marfrig Global and HPX Corp

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

Diversification Opportunities for Marfrig Global and HPX Corp

-0.62

Correlation Coefficient

Marfrig Global  HPX Corp

Excellent diversification

The 3 months correlation between Marfrig and HPX is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and HPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HPX 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 HPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HPX Corp has no effect on the direction of Marfrig Global i.e., Marfrig Global and HPX Corp go up and down completely randomly.

Pair Corralation between Marfrig Global and HPX Corp

Assuming the 90 days horizon Marfrig Global is expected to generate 26.96 times less return on investment than HPX Corp. But when comparing it to its historical volatility, Marfrig Global Foods is 10.12 times less risky than HPX Corp. It trades about 0.05 of its potential returns per unit of risk. HPX Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  995.00  in HPX Corp on October 14, 2024 and sell it today you would earn a total of  730.00  from holding HPX Corp or generate 73.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	6.25%
Values	Daily Returns

Marfrig Global Foods  vs.  HPX Corp

Marfrig Global Foods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 7 (%) 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.

HPX Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marfrig Global and HPX Corp

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

The idea behind Marfrig Global Foods and HPX 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.