Correlation Between JERONIMO MARTINS and Jernimo Martins

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

By analyzing existing cross correlation between JERONIMO MARTINS UNADR2 and Jernimo Martins SGPS, you can compare the effects of market volatilities on JERONIMO MARTINS and Jernimo 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 JERONIMO MARTINS with a short position of Jernimo Martins. Check out your portfolio center. Please also check ongoing floating volatility patterns of JERONIMO MARTINS and Jernimo Martins.

Diversification Opportunities for JERONIMO MARTINS and Jernimo Martins

0.95

Correlation Coefficient

JERONIMO MARTINS  Jernimo Martins

Almost no diversification

The 3 months correlation between JERONIMO and Jernimo is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding JERONIMO MARTINS UNADR2 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 JERONIMO 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 JERONIMO MARTINS UNADR2 are associated (or correlated) with Jernimo 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 JERONIMO MARTINS i.e., JERONIMO MARTINS and Jernimo Martins go up and down completely randomly.

Pair Corralation between JERONIMO MARTINS and Jernimo Martins

Assuming the 90 days trading horizon JERONIMO MARTINS is expected to generate 1.09 times less return on investment than Jernimo Martins. But when comparing it to its historical volatility, JERONIMO MARTINS UNADR2 is 1.06 times less risky than Jernimo Martins. It trades about 0.06 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 Strong
Accuracy	100.0%
Values	Daily Returns

JERONIMO MARTINS UNADR2  vs.  Jernimo Martins SGPS

JERONIMO MARTINS UNADR2

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JERONIMO MARTINS UNADR2 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, JERONIMO MARTINS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with JERONIMO MARTINS and Jernimo Martins

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

The idea behind JERONIMO MARTINS UNADR2 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.