Correlation Between Jeronimo Martins and Greenvolt Energias

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

By analyzing existing cross correlation between Jeronimo Martins SGPS and Greenvolt Energias Renovaveis, you can compare the effects of market volatilities on Jeronimo Martins and Greenvolt Energias 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 Greenvolt Energias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeronimo Martins and Greenvolt Energias.

Diversification Opportunities for Jeronimo Martins and Greenvolt Energias

-0.51

Correlation Coefficient

Jeronimo Martins  Greenvolt Energias

Excellent diversification

The 3 months correlation between Jeronimo and Greenvolt is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Jeronimo Martins SGPS and Greenvolt Energias Renovaveis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenvolt Energias 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 SGPS are associated (or correlated) with Greenvolt Energias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenvolt Energias has no effect on the direction of Jeronimo Martins i.e., Jeronimo Martins and Greenvolt Energias go up and down completely randomly.

Pair Corralation between Jeronimo Martins and Greenvolt Energias

Assuming the 90 days trading horizon Jeronimo Martins SGPS is expected to generate 2.21 times more return on investment than Greenvolt Energias. However, Jeronimo Martins is 2.21 times more volatile than Greenvolt Energias Renovaveis. It trades about 0.08 of its potential returns per unit of risk. Greenvolt Energias Renovaveis is currently generating about -0.01 per unit of risk. If you would invest  1,674  in Jeronimo Martins SGPS on August 30, 2024 and sell it today you would earn a total of  159.00  from holding Jeronimo Martins SGPS or generate 9.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Jeronimo Martins SGPS  vs.  Greenvolt Energias Renovaveis

Jeronimo Martins SGPS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jeronimo Martins SGPS are ranked lower than 6 (%) 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.

Greenvolt Energias

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenvolt Energias Renovaveis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Greenvolt Energias is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jeronimo Martins and Greenvolt Energias

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

The idea behind Jeronimo Martins SGPS and Greenvolt Energias Renovaveis 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.