Correlation Between X Financial and Jernimo Martins

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

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

Diversification Opportunities for X Financial and Jernimo Martins

0.36

Correlation Coefficient

X Financial  Jernimo Martins

Weak diversification

The 3 months correlation between XYF and Jernimo is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class 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 X Financial 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 X Financial Class 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 X Financial i.e., X Financial and Jernimo Martins go up and down completely randomly.

Pair Corralation between X Financial and Jernimo Martins

Considering the 90-day investment horizon X Financial Class is expected to generate 1.84 times more return on investment than Jernimo Martins. However, X Financial is 1.84 times more volatile than Jernimo Martins SGPS. It trades about 0.08 of its potential returns per unit of risk. Jernimo Martins SGPS is currently generating about -0.02 per unit of risk. If you would invest  395.00  in X Financial Class on October 4, 2024 and sell it today you would earn a total of  446.00  from holding X Financial Class or generate 112.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

X Financial Class  vs.  Jernimo Martins SGPS

X Financial Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Jernimo Martins SGPS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jernimo Martins SGPS are ranked lower than 4 (%) 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 February 2025.

Pair Trading with X Financial and Jernimo Martins

The main advantage of trading using opposite X Financial and Jernimo Martins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Financial 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 X Financial Class 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.