Correlation Between Natures Sunshine and BRF SA

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

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

Diversification Opportunities for Natures Sunshine and BRF SA

-0.26

Correlation Coefficient

Natures Sunshine  BRF SA

Very good diversification

The 3 months correlation between Natures and BRF is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Natures Sunshine Products 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 Natures Sunshine 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 Natures Sunshine Products 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 Natures Sunshine i.e., Natures Sunshine and BRF SA go up and down completely randomly.

Pair Corralation between Natures Sunshine and BRF SA

Given the investment horizon of 90 days Natures Sunshine Products is expected to under-perform the BRF SA. In addition to that, Natures Sunshine is 1.15 times more volatile than BRF SA ADR. It trades about -0.04 of its total potential returns per unit of risk. BRF SA ADR is currently generating about 0.17 per unit of volatility. If you would invest  280.00  in BRF SA ADR on February 19, 2024 and sell it today you would earn a total of  98.00  from holding BRF SA ADR or generate 35.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Natures Sunshine Products  vs.  BRF SA ADR

Natures Sunshine Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natures Sunshine Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

BRF SA ADR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BRF SA ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, BRF SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natures Sunshine and BRF SA

The main advantage of trading using opposite Natures Sunshine and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natures Sunshine 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 Natures Sunshine Products 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.