Correlation Between Hanover Foods and Marfrig Global

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

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

Diversification Opportunities for Hanover Foods and Marfrig Global

0.14

Correlation Coefficient

Hanover Foods  Marfrig Global

Average diversification

The 3 months correlation between Hanover and Marfrig is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hanover Foods 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 Hanover Foods 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 Hanover Foods 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 Hanover Foods i.e., Hanover Foods and Marfrig Global go up and down completely randomly.

Pair Corralation between Hanover Foods and Marfrig Global

If you would invest  6,172  in Hanover Foods on January 30, 2024 and sell it today you would earn a total of  0.00  from holding Hanover Foods or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Hanover Foods  vs.  Marfrig Global Foods

Hanover Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hanover Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hanover Foods 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

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Marfrig Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Hanover Foods and Marfrig Global

The main advantage of trading using opposite Hanover Foods and Marfrig Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanover Foods 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 Hanover Foods 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.