Correlation Between Chefs Warehouse and Jeronimo Martins

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

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

Diversification Opportunities for Chefs Warehouse and Jeronimo Martins

0.57

Correlation Coefficient

Chefs Warehouse  Jeronimo Martins

Very weak diversification

The 3 months correlation between Chefs and Jeronimo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Chefs Warehouse 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 Chefs Warehouse 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 The Chefs Warehouse 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 Chefs Warehouse i.e., Chefs Warehouse and Jeronimo Martins go up and down completely randomly.

Pair Corralation between Chefs Warehouse and Jeronimo Martins

Given the investment horizon of 90 days Chefs Warehouse is expected to generate 1.19 times less return on investment than Jeronimo Martins. In addition to that, Chefs Warehouse is 1.66 times more volatile than Jeronimo Martins SGPS. It trades about 0.07 of its total potential returns per unit of risk. Jeronimo Martins SGPS is currently generating about 0.14 per unit of volatility. If you would invest  3,785  in Jeronimo Martins SGPS on December 29, 2024 and sell it today you would earn a total of  478.00  from holding Jeronimo Martins SGPS or generate 12.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

The Chefs Warehouse  vs.  Jeronimo Martins SGPS

Chefs Warehouse

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Chefs Warehouse are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Chefs Warehouse may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Jeronimo Martins SGPS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jeronimo Martins SGPS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Jeronimo Martins showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chefs Warehouse and Jeronimo Martins

The main advantage of trading using opposite Chefs Warehouse and Jeronimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chefs Warehouse 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 The Chefs Warehouse 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.