Correlation Between Om Holdings and J Sainsbury

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

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

Diversification Opportunities for Om Holdings and J Sainsbury

0.5

Correlation Coefficient

Om Holdings  J Sainsbury

Very weak diversification

The 3 months correlation between OMHI and JSNSF is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Om Holdings International and J Sainsbury plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Sainsbury plc and Om Holdings 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 Om Holdings International are associated (or correlated) with J Sainsbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Sainsbury plc has no effect on the direction of Om Holdings i.e., Om Holdings and J Sainsbury go up and down completely randomly.

Pair Corralation between Om Holdings and J Sainsbury

Given the investment horizon of 90 days Om Holdings International is expected to under-perform the J Sainsbury. In addition to that, Om Holdings is 2.96 times more volatile than J Sainsbury plc. It trades about -0.12 of its total potential returns per unit of risk. J Sainsbury plc is currently generating about -0.01 per unit of volatility. If you would invest  389.00  in J Sainsbury plc on September 2, 2024 and sell it today you would lose (34.00) from holding J Sainsbury plc or give up 8.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Om Holdings International  vs.  J Sainsbury plc

Om Holdings International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Om Holdings International 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 technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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. Despite nearly stable basic indicators, J Sainsbury is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Om Holdings and J Sainsbury

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

The idea behind Om Holdings International and J Sainsbury plc 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.