Correlation Between Sendas Distribuidora and J Sainsbury

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

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

Diversification Opportunities for Sendas Distribuidora and J Sainsbury

0.31

Correlation Coefficient

Sendas Distribuidora  J Sainsbury

Weak diversification

The 3 months correlation between Sendas and JSAIY is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and J Sainsbury PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Sainsbury PLC and Sendas Distribuidora 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 Sendas Distribuidora SA are associated (or correlated) with J Sainsbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Sainsbury PLC has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and J Sainsbury go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and J Sainsbury

Given the investment horizon of 90 days Sendas Distribuidora SA is expected to generate 1.48 times more return on investment than J Sainsbury. However, Sendas Distribuidora is 1.48 times more volatile than J Sainsbury PLC. It trades about 0.13 of its potential returns per unit of risk. J Sainsbury PLC is currently generating about -0.09 per unit of risk. If you would invest  447.00  in Sendas Distribuidora SA on December 29, 2024 and sell it today you would earn a total of  13.00  from holding Sendas Distribuidora SA or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	14.75%
Values	Daily Returns

Sendas Distribuidora SA  vs.  J Sainsbury PLC

Sendas Distribuidora

Risk-Adjusted Performance

OK

Over the last 90 days Sendas Distribuidora SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, Sendas Distribuidora demonstrated solid returns over the last few months and may actually be approaching a breakup point.

J Sainsbury PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days J Sainsbury PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward 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 Sendas Distribuidora and J Sainsbury

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

The idea behind Sendas Distribuidora SA and J Sainsbury PLC 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.