Correlation Between Semapa and Jeronimo Martins

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

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

Diversification Opportunities for Semapa and Jeronimo Martins

-0.81

Correlation Coefficient

Semapa  Jeronimo Martins

Pay attention - limited upside

The 3 months correlation between Semapa and Jeronimo is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Semapa 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 Semapa 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 Semapa 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 Semapa i.e., Semapa and Jeronimo Martins go up and down completely randomly.

Pair Corralation between Semapa and Jeronimo Martins

Assuming the 90 days trading horizon Semapa is expected to under-perform the Jeronimo Martins. But the stock apears to be less risky and, when comparing its historical volatility, Semapa is 1.77 times less risky than Jeronimo Martins. The stock trades about -0.07 of its potential returns per unit of risk. The Jeronimo Martins SGPS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,676  in Jeronimo Martins SGPS on September 16, 2024 and sell it today you would earn a total of  200.00  from holding Jeronimo Martins SGPS or generate 11.93% return on investment over 90 days.

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

Semapa  vs.  Jeronimo Martins SGPS

Semapa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semapa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Semapa is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jeronimo Martins SGPS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jeronimo Martins SGPS are ranked lower than 8 (%) 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 January 2025.

Pair Trading with Semapa and Jeronimo Martins

The main advantage of trading using opposite Semapa and Jeronimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semapa 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 Semapa 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.