Correlation Between Sendas Distribuidora and Seven I

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

Diversification Opportunities for Sendas Distribuidora and Seven I

0.76

Correlation Coefficient

Sendas Distribuidora  Seven I

Poor diversification

The 3 months correlation between Sendas and Seven is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings 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 Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and Seven I go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Seven I

Given the investment horizon of 90 days Sendas Distribuidora SA is expected to generate 1.23 times more return on investment than Seven I. However, Sendas Distribuidora is 1.23 times more volatile than Seven i Holdings. It trades about 0.13 of its potential returns per unit of risk. Seven i Holdings is currently generating about -0.04 per unit of risk. If you would invest  447.00  in Sendas Distribuidora SA on December 28, 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	Significant
Accuracy	15.0%
Values	Daily Returns

Sendas Distribuidora SA  vs.  Seven i Holdings

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.

Seven i Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seven i Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Seven I is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sendas Distribuidora and Seven I

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

The idea behind Sendas Distribuidora SA and Seven i Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.