Correlation Between XCHG Limited and Marfrig Global

Can any of the company-specific risk be diversified away by investing in both XCHG Limited and Marfrig Global 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 XCHG Limited and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XCHG Limited American and Marfrig Global Foods, you can compare the effects of market volatilities on XCHG Limited and Marfrig Global 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 XCHG Limited with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of XCHG Limited and Marfrig Global.

Diversification Opportunities for XCHG Limited and Marfrig Global

0.19

Correlation Coefficient

XCHG Limited  Marfrig Global

Average diversification

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

Pair Corralation between XCHG Limited and Marfrig Global

Considering the 90-day investment horizon XCHG Limited American is expected to under-perform the Marfrig Global. In addition to that, XCHG Limited is 4.83 times more volatile than Marfrig Global Foods. It trades about -0.14 of its total potential returns per unit of risk. Marfrig Global Foods is currently generating about -0.15 per unit of volatility. If you would invest  323.00  in Marfrig Global Foods on October 11, 2024 and sell it today you would lose (51.00) from holding Marfrig Global Foods or give up 15.79% of portfolio value over 90 days.

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

XCHG Limited American  vs.  Marfrig Global Foods

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 latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Marfrig Global Foods

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 8 (%) 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.

Pair Trading with XCHG Limited and Marfrig Global

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

The idea behind XCHG Limited American and Marfrig Global Foods 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.