Correlation Between BRF SA and GeoPark

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

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

Diversification Opportunities for BRF SA and GeoPark

0.41

Correlation Coefficient

BRF SA  GeoPark

Very weak diversification

The 3 months correlation between BRF and GeoPark is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA ADR and GeoPark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoPark and BRF SA 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 BRF SA ADR are associated (or correlated) with GeoPark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoPark has no effect on the direction of BRF SA i.e., BRF SA and GeoPark go up and down completely randomly.

Pair Corralation between BRF SA and GeoPark

Given the investment horizon of 90 days BRF SA ADR is expected to generate 0.99 times more return on investment than GeoPark. However, BRF SA ADR is 1.01 times less risky than GeoPark. It trades about 0.02 of its potential returns per unit of risk. GeoPark is currently generating about -0.01 per unit of risk. If you would invest  354.00  in BRF SA ADR on May 6, 2025 and sell it today you would earn a total of  6.00  from holding BRF SA ADR or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

BRF SA ADR  vs.  GeoPark

BRF SA ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRF SA ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, BRF SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

GeoPark

Risk-Adjusted Performance

Very Weak

Over the last 90 days GeoPark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GeoPark is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BRF SA and GeoPark

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

The idea behind BRF SA ADR and GeoPark 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.