Correlation Between Sendas Distribuidora and Hf Foods

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

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

Diversification Opportunities for Sendas Distribuidora and Hf Foods

-0.51

Correlation Coefficient

Sendas Distribuidora  Hf Foods

Excellent diversification

The 3 months correlation between Sendas and HFFG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and Hf Foods Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hf Foods Group and Sendas Distribuidora 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 Sendas Distribuidora SA are associated (or correlated) with Hf Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hf Foods Group has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and Hf Foods go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Hf Foods

Given the investment horizon of 90 days Sendas Distribuidora SA is expected to under-perform the Hf Foods. But the stock apears to be less risky and, when comparing its historical volatility, Sendas Distribuidora SA is 1.24 times less risky than Hf Foods. The stock trades about -0.07 of its potential returns per unit of risk. The Hf Foods Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  417.00  in Hf Foods Group on September 23, 2024 and sell it today you would lose (71.00) from holding Hf Foods Group or give up 17.03% of portfolio value over 90 days.

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

Sendas Distribuidora SA  vs.  Hf Foods Group

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 January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Hf Foods Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hf Foods Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Hf Foods may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sendas Distribuidora and Hf Foods

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

The idea behind Sendas Distribuidora SA and Hf Foods Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.