Correlation Between Marfrig Global and Kura Sushi

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

Diversification Opportunities for Marfrig Global and Kura Sushi

0.72

Correlation Coefficient

Marfrig Global  Kura Sushi

Poor diversification

The 3 months correlation between Marfrig and Kura is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Marfrig Global i.e., Marfrig Global and Kura Sushi go up and down completely randomly.

Pair Corralation between Marfrig Global and Kura Sushi

Assuming the 90 days horizon Marfrig Global is expected to generate 1.42 times less return on investment than Kura Sushi. But when comparing it to its historical volatility, Marfrig Global Foods is 1.01 times less risky than Kura Sushi. It trades about 0.04 of its potential returns per unit of risk. Kura Sushi USA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,397  in Kura Sushi USA on September 20, 2024 and sell it today you would earn a total of  773.00  from holding Kura Sushi USA or generate 9.21% return on investment over 90 days.

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

Marfrig Global Foods  vs.  Kura Sushi USA

Marfrig Global Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kura Sushi USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kura Sushi USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kura Sushi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marfrig Global and Kura Sushi

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

The idea behind Marfrig Global Foods and Kura Sushi USA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.