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 PK, 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

0.02

Correlation Coefficient

J Sainsbury  Carrefour

Significant diversification

The 3 months correlation between JSAIY and Carrefour is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding J Sainsbury PLC and Carrefour SA PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA PK 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 PK 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 1.06 times less risky than Carrefour. The otc stock trades about -0.09 of its potential returns per unit of risk. The Carrefour SA PK is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Carrefour SA PK on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Carrefour SA PK or generate 1.42% return on investment over 90 days.

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

J Sainsbury PLC  vs.  Carrefour SA PK

J Sainsbury PLC

Risk-Adjusted Performance

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 latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Carrefour SA PK

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carrefour SA PK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Carrefour is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 PK 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.