Correlation Between Sendas Distribuidora and Maison Solutions

Can any of the company-specific risk be diversified away by investing in both Sendas Distribuidora and Maison Solutions 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 Maison Solutions 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 Maison Solutions, you can compare the effects of market volatilities on Sendas Distribuidora and Maison Solutions 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 Maison Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sendas Distribuidora and Maison Solutions.

Diversification Opportunities for Sendas Distribuidora and Maison Solutions

-0.24

Correlation Coefficient

Sendas Distribuidora  Maison Solutions

Very good diversification

The 3 months correlation between Sendas and Maison is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and Maison Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maison Solutions 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 Maison Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maison Solutions has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and Maison Solutions go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Maison Solutions

Given the investment horizon of 90 days Sendas Distribuidora SA is expected to under-perform the Maison Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Sendas Distribuidora SA is 1.5 times less risky than Maison Solutions. The stock trades about -0.07 of its potential returns per unit of risk. The Maison Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Maison Solutions on October 9, 2024 and sell it today you would earn a total of  50.00  from holding Maison Solutions or generate 40.0% return on investment over 90 days.

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

Sendas Distribuidora SA  vs.  Maison Solutions

Sendas Distribuidora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sendas Distribuidora SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Maison Solutions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maison Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Maison Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sendas Distribuidora and Maison Solutions

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

The idea behind Sendas Distribuidora SA and Maison Solutions 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.