Correlation Between GEELY AUTOMOBILE and Jerónimo Martins

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

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

Diversification Opportunities for GEELY AUTOMOBILE and Jerónimo Martins

0.69

Correlation Coefficient

GEELY AUTOMOBILE  Jerónimo Martins

Poor diversification

The 3 months correlation between GEELY and Jerónimo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GEELY AUTOMOBILE and Jernimo Martins SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jernimo Martins SGPS and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE are associated (or correlated) with Jerónimo Martins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jernimo Martins SGPS has no effect on the direction of GEELY AUTOMOBILE i.e., GEELY AUTOMOBILE and Jerónimo Martins go up and down completely randomly.

Pair Corralation between GEELY AUTOMOBILE and Jerónimo Martins

Assuming the 90 days trading horizon GEELY AUTOMOBILE is expected to generate 1.96 times more return on investment than Jerónimo Martins. However, GEELY AUTOMOBILE is 1.96 times more volatile than Jernimo Martins SGPS. It trades about 0.07 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about 0.09 per unit of risk. If you would invest  186.00  in GEELY AUTOMOBILE on December 22, 2024 and sell it today you would earn a total of  20.00  from holding GEELY AUTOMOBILE or generate 10.75% return on investment over 90 days.

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

GEELY AUTOMOBILE  vs.  Jernimo Martins SGPS

GEELY AUTOMOBILE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GEELY AUTOMOBILE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, GEELY AUTOMOBILE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jernimo Martins SGPS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jernimo Martins SGPS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Jerónimo Martins may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GEELY AUTOMOBILE and Jerónimo Martins

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

The idea behind GEELY AUTOMOBILE and Jernimo 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.