Correlation Between J Sainsbury and Carrefour

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

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

Diversification Opportunities for J Sainsbury and Carrefour

0.6

Correlation Coefficient

J Sainsbury  Carrefour

Poor diversification

The 3 months correlation between JSAIY and Carrefour is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding J Sainsbury PLC and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA and J Sainsbury 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 J Sainsbury PLC are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of J Sainsbury i.e., J Sainsbury and Carrefour go up and down completely randomly.

Pair Corralation between J Sainsbury and Carrefour

Assuming the 90 days horizon J Sainsbury PLC is expected to under-perform the Carrefour. But the otc stock apears to be less risky and, when comparing its historical volatility, J Sainsbury PLC is 1.39 times less risky than Carrefour. The otc stock trades about -0.15 of its potential returns per unit of risk. The Carrefour SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,585  in Carrefour SA on September 3, 2024 and sell it today you would lose (12.00) from holding Carrefour SA or give up 0.76% of portfolio value over 90 days.

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

J Sainsbury PLC  vs.  Carrefour SA

J Sainsbury PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J Sainsbury PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Carrefour SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Carrefour is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with J Sainsbury and Carrefour

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

The idea behind J Sainsbury PLC and Carrefour 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.