Correlation Between Sendas Distribuidora and Cable One

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

Diversification Opportunities for Sendas Distribuidora and Cable One

-0.39

Correlation Coefficient

Sendas Distribuidora  Cable One

Very good diversification

The 3 months correlation between Sendas and Cable is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and Cable One go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Cable One

Assuming the 90 days trading horizon Sendas Distribuidora SA is expected to under-perform the Cable One. But the stock apears to be less risky and, when comparing its historical volatility, Sendas Distribuidora SA is 1.07 times less risky than Cable One. The stock trades about -0.07 of its potential returns per unit of risk. The Cable One is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,136  in Cable One on October 26, 2024 and sell it today you would lose (1,052) from holding Cable One or give up 49.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.4%
Values	Daily Returns

Sendas Distribuidora SA  vs.  Cable One

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cable One

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sendas Distribuidora and Cable One

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

The idea behind Sendas Distribuidora SA and Cable One 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.