Correlation Between Sendas Distribuidora and Kroger

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

Diversification Opportunities for Sendas Distribuidora and Kroger

-0.79

Correlation Coefficient

Sendas Distribuidora  Kroger

Pay attention - limited upside

The 3 months correlation between Sendas and Kroger is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger 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 Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Kroger has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and Kroger go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Kroger

Assuming the 90 days trading horizon Sendas Distribuidora SA is expected to under-perform the Kroger. In addition to that, Sendas Distribuidora is 1.5 times more volatile than The Kroger Co. It trades about -0.04 of its total potential returns per unit of risk. The Kroger Co is currently generating about 0.17 per unit of volatility. If you would invest  30,562  in The Kroger Co on October 9, 2024 and sell it today you would earn a total of  7,628  from holding The Kroger Co or generate 24.96% return on investment over 90 days.

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

Sendas Distribuidora SA  vs.  The Kroger Co

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

The Kroger

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Kroger Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kroger sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sendas Distribuidora and Kroger

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

The idea behind Sendas Distribuidora SA and The Kroger Co 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.