Correlation Between Jernimo Martins and Uber Technologies

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

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

Diversification Opportunities for Jernimo Martins and Uber Technologies

-0.16

Correlation Coefficient

Jernimo Martins  Uber Technologies

Good diversification

The 3 months correlation between Jernimo and Uber is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Jernimo Martins SGPS and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Jernimo 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 Jernimo Martins SGPS are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Jernimo Martins i.e., Jernimo Martins and Uber Technologies go up and down completely randomly.

Pair Corralation between Jernimo Martins and Uber Technologies

Assuming the 90 days horizon Jernimo Martins SGPS is expected to under-perform the Uber Technologies. In addition to that, Jernimo Martins is 1.62 times more volatile than Uber Technologies. It trades about -0.21 of its total potential returns per unit of risk. Uber Technologies is currently generating about -0.34 per unit of volatility. If you would invest  7,941  in Uber Technologies on January 25, 2024 and sell it today you would lose (1,005) from holding Uber Technologies or give up 12.66% of portfolio value over 90 days.

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

Jernimo Martins SGPS  vs.  Uber Technologies

Jernimo Martins SGPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jernimo Martins SGPS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Uber Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Jernimo Martins and Uber Technologies

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

The idea behind Jernimo Martins SGPS and Uber Technologies 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.