Correlation Between Marfrig Global and XCHG Limited

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

Diversification Opportunities for Marfrig Global and XCHG Limited

0.19

Correlation Coefficient

Marfrig Global  XCHG Limited

Average diversification

The 3 months correlation between Marfrig and XCHG is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and XCHG Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCHG Limited American 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 XCHG Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCHG Limited American has no effect on the direction of Marfrig Global i.e., Marfrig Global and XCHG Limited go up and down completely randomly.

Pair Corralation between Marfrig Global and XCHG Limited

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 0.21 times more return on investment than XCHG Limited. However, Marfrig Global Foods is 4.81 times less risky than XCHG Limited. It trades about -0.26 of its potential returns per unit of risk. XCHG Limited American is currently generating about -0.25 per unit of risk. If you would invest  348.00  in Marfrig Global Foods on October 12, 2024 and sell it today you would lose (76.00) from holding Marfrig Global Foods or give up 21.84% 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.  XCHG Limited American

Marfrig Global Foods

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 6 (%) 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.

XCHG Limited American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XCHG Limited American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Marfrig Global and XCHG Limited

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

The idea behind Marfrig Global Foods and XCHG Limited American 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.