Correlation Between Fresh Grapes and BRF SA

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

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

Diversification Opportunities for Fresh Grapes and BRF SA

-0.74

Correlation Coefficient

Fresh Grapes  BRF SA

Pay attention - limited upside

The 3 months correlation between Fresh and BRF is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fresh Grapes LLC 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 Fresh Grapes 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 Fresh Grapes LLC 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 Fresh Grapes i.e., Fresh Grapes and BRF SA go up and down completely randomly.

Pair Corralation between Fresh Grapes and BRF SA

Given the investment horizon of 90 days Fresh Grapes LLC is expected to under-perform the BRF SA. In addition to that, Fresh Grapes is 1.89 times more volatile than BRF SA ADR. It trades about -0.25 of its total potential returns per unit of risk. BRF SA ADR is currently generating about 0.08 per unit of volatility. If you would invest  318.00  in BRF SA ADR on February 4, 2024 and sell it today you would earn a total of  15.00  from holding BRF SA ADR or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fresh Grapes LLC  vs.  BRF SA ADR

Fresh Grapes LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fresh Grapes LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BRF SA ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BRF SA ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain 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 Fresh Grapes and BRF SA

The main advantage of trading using opposite Fresh Grapes and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresh Grapes 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 Fresh Grapes LLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.