Correlation Between Marfrig Global and Perceptive Capital

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

Diversification Opportunities for Marfrig Global and Perceptive Capital

0.17

Correlation Coefficient

Marfrig Global  Perceptive Capital

Average diversification

The 3 months correlation between Marfrig and Perceptive is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Perceptive Capital Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perceptive Capital 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 Perceptive Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perceptive Capital has no effect on the direction of Marfrig Global i.e., Marfrig Global and Perceptive Capital go up and down completely randomly.

Pair Corralation between Marfrig Global and Perceptive Capital

Assuming the 90 days horizon Marfrig Global is expected to generate 44.76 times less return on investment than Perceptive Capital. But when comparing it to its historical volatility, Marfrig Global Foods is 25.37 times less risky than Perceptive Capital. It trades about 0.05 of its potential returns per unit of risk. Perceptive Capital Solutions is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Perceptive Capital Solutions on October 24, 2024 and sell it today you would earn a total of  1,020  from holding Perceptive Capital Solutions or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	31.24%
Values	Daily Returns

Marfrig Global Foods  vs.  Perceptive Capital Solutions

Marfrig Global Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Perceptive Capital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perceptive Capital Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Perceptive Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Marfrig Global and Perceptive Capital

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

The idea behind Marfrig Global Foods and Perceptive Capital Solutions 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.