Correlation Between Altri SGPS and Jeronimo Martins

Can any of the company-specific risk be diversified away by investing in both Altri SGPS and Jeronimo Martins 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 Altri SGPS and Jeronimo Martins into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altri SGPS SA and Jeronimo Martins SGPS, you can compare the effects of market volatilities on Altri SGPS and Jeronimo Martins 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 Altri SGPS with a short position of Jeronimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altri SGPS and Jeronimo Martins.

Diversification Opportunities for Altri SGPS and Jeronimo Martins

0.39

Correlation Coefficient

Altri SGPS  Jeronimo Martins

Weak diversification

The 3 months correlation between Altri and Jeronimo is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Altri SGPS SA and Jeronimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeronimo Martins SGPS and Altri SGPS 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 Altri SGPS SA are associated (or correlated) with Jeronimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeronimo Martins SGPS has no effect on the direction of Altri SGPS i.e., Altri SGPS and Jeronimo Martins go up and down completely randomly.

Pair Corralation between Altri SGPS and Jeronimo Martins

Assuming the 90 days trading horizon Altri SGPS is expected to generate 6.89 times less return on investment than Jeronimo Martins. But when comparing it to its historical volatility, Altri SGPS SA is 1.68 times less risky than Jeronimo Martins. It trades about 0.02 of its potential returns per unit of risk. Jeronimo Martins SGPS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,666  in Jeronimo Martins SGPS on September 1, 2024 and sell it today you would earn a total of  178.00  from holding Jeronimo Martins SGPS or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Altri SGPS SA  vs.  Jeronimo Martins SGPS

Altri SGPS SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Altri SGPS SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Altri SGPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jeronimo Martins SGPS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeronimo Martins SGPS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jeronimo Martins may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Altri SGPS and Jeronimo Martins

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

The idea behind Altri SGPS SA and Jeronimo Martins SGPS 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..