Correlation Between Seven I and J Sainsbury

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

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

Diversification Opportunities for Seven I and J Sainsbury

0.01

Correlation Coefficient

Seven I  J Sainsbury

Significant diversification

The 3 months correlation between Seven and JSNSF is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings 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 Seven I 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 Seven i Holdings 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 Seven I i.e., Seven I and J Sainsbury go up and down completely randomly.

Pair Corralation between Seven I and J Sainsbury

Assuming the 90 days horizon Seven i Holdings is expected to under-perform the J Sainsbury. But the pink sheet apears to be less risky and, when comparing its historical volatility, Seven i Holdings is 2.69 times less risky than J Sainsbury. The pink sheet trades about -0.04 of its potential returns per unit of risk. The J Sainsbury plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  342.00  in J Sainsbury plc on December 29, 2024 and sell it today you would lose (2.00) from holding J Sainsbury plc or give up 0.58% of portfolio value over 90 days.

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

Seven i Holdings  vs.  J Sainsbury plc

Seven i Holdings

Risk-Adjusted Performance

Very Weak

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

J Sainsbury plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J Sainsbury plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, J Sainsbury may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Seven I and J Sainsbury

The main advantage of trading using opposite Seven I and J Sainsbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven I 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 Seven i Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.