Correlation Between Kesko Oyj and Sendas Distribuidora

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

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

Diversification Opportunities for Kesko Oyj and Sendas Distribuidora

-0.16

Correlation Coefficient

Kesko Oyj  Sendas Distribuidora

Good diversification

The 3 months correlation between Kesko and Sendas is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kesko Oyj ADR and Sendas Distribuidora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendas Distribuidora and Kesko Oyj 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 Kesko Oyj ADR 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 Kesko Oyj i.e., Kesko Oyj and Sendas Distribuidora go up and down completely randomly.

Pair Corralation between Kesko Oyj and Sendas Distribuidora

Assuming the 90 days horizon Kesko Oyj ADR is expected to generate 0.48 times more return on investment than Sendas Distribuidora. However, Kesko Oyj ADR is 2.1 times less risky than Sendas Distribuidora. It trades about 0.0 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about -0.14 per unit of risk. If you would invest  1,004  in Kesko Oyj ADR on August 31, 2024 and sell it today you would lose (13.00) from holding Kesko Oyj ADR or give up 1.29% of portfolio value over 90 days.

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

Kesko Oyj ADR  vs.  Sendas Distribuidora SA

Kesko Oyj ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kesko Oyj ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kesko Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Kesko Oyj and Sendas Distribuidora

The main advantage of trading using opposite Kesko Oyj and Sendas Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko Oyj 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 Kesko Oyj ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.