Correlation Between Companhia Brasileira and Sendas Distribuidora

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

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

Diversification Opportunities for Companhia Brasileira and Sendas Distribuidora

0.15

Correlation Coefficient

Companhia Brasileira  Sendas Distribuidora

Average diversification

The 3 months correlation between Companhia and Sendas is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira de and Sendas Distribuidora SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sendas Distribuidora and Companhia Brasileira 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 Companhia Brasileira de 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 Companhia Brasileira i.e., Companhia Brasileira and Sendas Distribuidora go up and down completely randomly.

Pair Corralation between Companhia Brasileira and Sendas Distribuidora

Assuming the 90 days trading horizon Companhia Brasileira is expected to generate 14.22 times less return on investment than Sendas Distribuidora. But when comparing it to its historical volatility, Companhia Brasileira de is 1.02 times less risky than Sendas Distribuidora. It trades about 0.01 of its potential returns per unit of risk. Sendas Distribuidora SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  581.00  in Sendas Distribuidora SA on December 24, 2024 and sell it today you would earn a total of  170.00  from holding Sendas Distribuidora SA or generate 29.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Companhia Brasileira de  vs.  Sendas Distribuidora SA

Companhia Brasileira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia Brasileira de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Companhia Brasileira is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sendas Distribuidora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sendas Distribuidora SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sendas Distribuidora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Companhia Brasileira and Sendas Distribuidora

The main advantage of trading using opposite Companhia Brasileira and Sendas Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Brasileira 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 Companhia Brasileira de 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..