Correlation Between Cable One and Sendas Distribuidora

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

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

Diversification Opportunities for Cable One and Sendas Distribuidora

-0.39

Correlation Coefficient

Cable One  Sendas Distribuidora

Very good diversification

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

Pair Corralation between Cable One and Sendas Distribuidora

Assuming the 90 days trading horizon Cable One is expected to generate 0.49 times more return on investment than Sendas Distribuidora. However, Cable One is 2.04 times less risky than Sendas Distribuidora. It trades about 0.11 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about -0.06 per unit of risk. If you would invest  981.00  in Cable One on October 26, 2024 and sell it today you would earn a total of  103.00  from holding Cable One or generate 10.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Cable One  vs.  Sendas Distribuidora SA

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.

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.

Pair Trading with Cable One and Sendas Distribuidora

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

The idea behind Cable One and Sendas Distribuidora SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.