Correlation Between Jernimo Martins and PF Bakkafrost

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

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

Diversification Opportunities for Jernimo Martins and PF Bakkafrost

0.36

Correlation Coefficient

Jernimo Martins  PF Bakkafrost

Weak diversification

The 3 months correlation between Jernimo and 6BF is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Jernimo Martins SGPS and PF Bakkafrost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PF Bakkafrost and Jernimo Martins 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 Jernimo Martins SGPS are associated (or correlated) with PF Bakkafrost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PF Bakkafrost has no effect on the direction of Jernimo Martins i.e., Jernimo Martins and PF Bakkafrost go up and down completely randomly.

Pair Corralation between Jernimo Martins and PF Bakkafrost

Assuming the 90 days horizon Jernimo Martins SGPS is expected to generate 0.88 times more return on investment than PF Bakkafrost. However, Jernimo Martins SGPS is 1.13 times less risky than PF Bakkafrost. It trades about 0.06 of its potential returns per unit of risk. PF Bakkafrost is currently generating about -0.05 per unit of risk. If you would invest  1,772  in Jernimo Martins SGPS on September 23, 2024 and sell it today you would earn a total of  33.00  from holding Jernimo Martins SGPS or generate 1.86% return on investment over 90 days.

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

Jernimo Martins SGPS  vs.  PF Bakkafrost

Jernimo Martins SGPS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jernimo Martins SGPS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jernimo Martins may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PF Bakkafrost

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Jernimo Martins and PF Bakkafrost

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

The idea behind Jernimo Martins SGPS and PF Bakkafrost 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.