Correlation Between Kraft Heinz and JBS SA

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

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

Diversification Opportunities for Kraft Heinz and JBS SA

-0.08

Correlation Coefficient

Kraft Heinz  JBS SA

Good diversification

The 3 months correlation between Kraft and JBS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Kraft Heinz and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Kraft Heinz 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 The Kraft Heinz are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Kraft Heinz i.e., Kraft Heinz and JBS SA go up and down completely randomly.

Pair Corralation between Kraft Heinz and JBS SA

Assuming the 90 days trading horizon The Kraft Heinz is expected to under-perform the JBS SA. But the stock apears to be less risky and, when comparing its historical volatility, The Kraft Heinz is 1.07 times less risky than JBS SA. The stock trades about -0.06 of its potential returns per unit of risk. The JBS SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,503  in JBS SA on September 26, 2024 and sell it today you would earn a total of  218.00  from holding JBS SA or generate 6.22% return on investment over 90 days.

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

The Kraft Heinz  vs.  JBS SA

Kraft Heinz

Risk-Adjusted Performance

1 of 100

Weak

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

JBS SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JBS SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, JBS SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kraft Heinz and JBS SA

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

The idea behind The Kraft Heinz and JBS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.