Correlation Between Jeronimo Martins and Semapa

Can any of the company-specific risk be diversified away by investing in both Jeronimo Martins and Semapa 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 Semapa 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 Semapa, you can compare the effects of market volatilities on Jeronimo Martins and Semapa 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 Semapa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeronimo Martins and Semapa.

Diversification Opportunities for Jeronimo Martins and Semapa

-0.71

Correlation Coefficient

Jeronimo Martins  Semapa

Pay attention - limited upside

The 3 months correlation between Jeronimo and Semapa is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Jeronimo Martins SGPS and Semapa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semapa 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 Semapa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semapa has no effect on the direction of Jeronimo Martins i.e., Jeronimo Martins and Semapa go up and down completely randomly.

Pair Corralation between Jeronimo Martins and Semapa

Assuming the 90 days trading horizon Jeronimo Martins SGPS is expected to under-perform the Semapa. In addition to that, Jeronimo Martins is 1.81 times more volatile than Semapa. It trades about -0.1 of its total potential returns per unit of risk. Semapa is currently generating about 0.09 per unit of volatility. If you would invest  1,332  in Semapa on January 24, 2024 and sell it today you would earn a total of  216.00  from holding Semapa or generate 16.22% return on investment over 90 days.

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

Jeronimo Martins SGPS  vs.  Semapa

Jeronimo Martins SGPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeronimo Martins SGPS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Semapa

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semapa are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Semapa may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Jeronimo Martins and Semapa

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

The idea behind Jeronimo Martins SGPS and Semapa 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.