Correlation Between Marfrig Global and Aduro Clean

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

Diversification Opportunities for Marfrig Global and Aduro Clean

0.19

Correlation Coefficient

Marfrig Global  Aduro Clean

Average diversification

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

Pair Corralation between Marfrig Global and Aduro Clean

Assuming the 90 days horizon Marfrig Global Foods is expected to under-perform the Aduro Clean. In addition to that, Marfrig Global is 1.69 times more volatile than Aduro Clean Technologies. It trades about -0.09 of its total potential returns per unit of risk. Aduro Clean Technologies is currently generating about 0.02 per unit of volatility. If you would invest  545.00  in Aduro Clean Technologies on September 24, 2024 and sell it today you would earn a total of  1.00  from holding Aduro Clean Technologies or generate 0.18% return on investment over 90 days.

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

Marfrig Global Foods  vs.  Aduro Clean Technologies

Marfrig Global Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Aduro Clean Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marfrig Global and Aduro Clean

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

The idea behind Marfrig Global Foods and Aduro Clean Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.