Correlation Between Marfrig Global and Electrovaya Common

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

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

Diversification Opportunities for Marfrig Global and Electrovaya Common

-0.51

Correlation Coefficient

Marfrig Global  Electrovaya Common

Excellent diversification

The 3 months correlation between Marfrig and Electrovaya is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Marfrig Global i.e., Marfrig Global and Electrovaya Common go up and down completely randomly.

Pair Corralation between Marfrig Global and Electrovaya Common

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 0.93 times more return on investment than Electrovaya Common. However, Marfrig Global Foods is 1.08 times less risky than Electrovaya Common. It trades about 0.03 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about -0.01 per unit of risk. If you would invest  178.00  in Marfrig Global Foods on July 20, 2024 and sell it today you would earn a total of  54.00  from holding Marfrig Global Foods or generate 30.34% return on investment over 90 days.

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

Marfrig Global Foods  vs.  Electrovaya Common Shares

Marfrig Global Foods

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Electrovaya Common Shares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marfrig Global and Electrovaya Common

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

The idea behind Marfrig Global Foods and Electrovaya Common Shares 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.