Correlation Between RIOLN and Marfrig Global

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

By analyzing existing cross correlation between RIOLN 275 02 NOV 51 and Marfrig Global Foods, you can compare the effects of market volatilities on RIOLN 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 RIOLN with a short position of Marfrig Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of RIOLN and Marfrig Global.

Diversification Opportunities for RIOLN and Marfrig Global

-0.4

Correlation Coefficient

RIOLN  Marfrig Global

Very good diversification

The 3 months correlation between RIOLN and Marfrig is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding RIOLN 275 02 NOV 51 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 RIOLN 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 RIOLN 275 02 NOV 51 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 RIOLN i.e., RIOLN and Marfrig Global go up and down completely randomly.

Pair Corralation between RIOLN and Marfrig Global

Assuming the 90 days trading horizon RIOLN is expected to generate 1.87 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, RIOLN 275 02 NOV 51 is 1.54 times less risky than Marfrig Global. It trades about 0.04 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  246.00  in Marfrig Global Foods on September 30, 2024 and sell it today you would earn a total of  16.00  from holding Marfrig Global Foods or generate 6.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

RIOLN 275 02 NOV 51  vs.  Marfrig Global Foods

RIOLN 275 02

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RIOLN 275 02 NOV 51 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, RIOLN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 unfluctuating basic indicators, Marfrig Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RIOLN and Marfrig Global

The main advantage of trading using opposite RIOLN and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RIOLN 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.

The idea behind RIOLN 275 02 NOV 51 and Marfrig Global Foods 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.