Correlation Between Naturally Splendid and BRF SA

Can any of the company-specific risk be diversified away by investing in both Naturally Splendid and BRF SA 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 Naturally Splendid and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Naturally Splendid Enterprises and BRF SA ADR, you can compare the effects of market volatilities on Naturally Splendid and BRF SA 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 Naturally Splendid with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturally Splendid and BRF SA.

Diversification Opportunities for Naturally Splendid and BRF SA

0.0

Correlation Coefficient

Naturally Splendid  BRF SA

Pay attention - limited upside

The 3 months correlation between Naturally and BRF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Naturally Splendid Enterprises and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR and Naturally Splendid 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 Naturally Splendid Enterprises are associated (or correlated) with BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of Naturally Splendid i.e., Naturally Splendid and BRF SA go up and down completely randomly.

Pair Corralation between Naturally Splendid and BRF SA

If you would invest  427.00  in BRF SA ADR on September 12, 2024 and sell it today you would earn a total of  40.00  from holding BRF SA ADR or generate 9.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Naturally Splendid Enterprises  vs.  BRF SA ADR

Naturally Splendid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naturally Splendid Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Naturally Splendid is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BRF SA ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BRF SA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, BRF SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Naturally Splendid and BRF SA

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

The idea behind Naturally Splendid Enterprises and BRF SA ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.