Correlation Between So Martinho and Marfrig Global
Can any of the company-specific risk be diversified away by investing in both So Martinho 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 So Martinho and Marfrig Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between So Martinho SA and Marfrig Global Foods, you can compare the effects of market volatilities on So Martinho 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 So Martinho with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of So Martinho and Marfrig Global.
Diversification Opportunities for So Martinho and Marfrig Global
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SMTO3 and Marfrig is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding So Martinho SA 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 So Martinho 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 So Martinho SA 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 So Martinho i.e., So Martinho and Marfrig Global go up and down completely randomly.
Pair Corralation between So Martinho and Marfrig Global
Assuming the 90 days trading horizon So Martinho SA is expected to under-perform the Marfrig Global. But the stock apears to be less risky and, when comparing its historical volatility, So Martinho SA is 1.4 times less risky than Marfrig Global. The stock trades about -0.02 of its potential returns per unit of risk. The Marfrig Global Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 661.00 in Marfrig Global Foods on September 6, 2024 and sell it today you would earn a total of 1,288 from holding Marfrig Global Foods or generate 194.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
So Martinho SA vs. Marfrig Global Foods
Performance |
Timeline |
So Martinho SA |
Marfrig Global Foods |
So Martinho and Marfrig Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with So Martinho and Marfrig Global
The main advantage of trading using opposite So Martinho and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if So Martinho 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.So Martinho vs. SLC Agrcola SA | So Martinho vs. Cosan SA | So Martinho vs. Minerva SA | So Martinho vs. Randon SA Implementos |
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Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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