Correlation Between J Sainsbury and AfriTin Mining

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

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

Diversification Opportunities for J Sainsbury and AfriTin Mining

0.87

Correlation Coefficient

J Sainsbury  AfriTin Mining

Very poor diversification

The 3 months correlation between SBRY and AfriTin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding J Sainsbury PLC and AfriTin Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfriTin Mining and J Sainsbury 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 J Sainsbury PLC are associated (or correlated) with AfriTin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfriTin Mining has no effect on the direction of J Sainsbury i.e., J Sainsbury and AfriTin Mining go up and down completely randomly.

Pair Corralation between J Sainsbury and AfriTin Mining

Assuming the 90 days trading horizon J Sainsbury PLC is expected to generate 0.35 times more return on investment than AfriTin Mining. However, J Sainsbury PLC is 2.85 times less risky than AfriTin Mining. It trades about -0.11 of its potential returns per unit of risk. AfriTin Mining is currently generating about -0.04 per unit of risk. If you would invest  29,243  in J Sainsbury PLC on September 5, 2024 and sell it today you would lose (3,063) from holding J Sainsbury PLC or give up 10.47% of portfolio value over 90 days.

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

J Sainsbury PLC  vs.  AfriTin Mining

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. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AfriTin Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfriTin Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with J Sainsbury and AfriTin Mining

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

The idea behind J Sainsbury PLC and AfriTin Mining 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.