Correlation Between Marfrig Global and WEBTOON Entertainment

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

Diversification Opportunities for Marfrig Global and WEBTOON Entertainment

0.24

Correlation Coefficient

Marfrig Global  WEBTOON Entertainment

Modest diversification

The 3 months correlation between Marfrig and WEBTOON is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and WEBTOON Entertainment Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEBTOON Entertainment 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 WEBTOON Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEBTOON Entertainment has no effect on the direction of Marfrig Global i.e., Marfrig Global and WEBTOON Entertainment go up and down completely randomly.

Pair Corralation between Marfrig Global and WEBTOON Entertainment

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 0.7 times more return on investment than WEBTOON Entertainment. However, Marfrig Global Foods is 1.42 times less risky than WEBTOON Entertainment. It trades about 0.13 of its potential returns per unit of risk. WEBTOON Entertainment Common is currently generating about 0.04 per unit of risk. If you would invest  249.00  in Marfrig Global Foods on September 4, 2024 and sell it today you would earn a total of  56.00  from holding Marfrig Global Foods or generate 22.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Marfrig Global Foods  vs.  WEBTOON Entertainment Common

Marfrig Global Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 9 (%) 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.

WEBTOON Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WEBTOON Entertainment Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, WEBTOON Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marfrig Global and WEBTOON Entertainment

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

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