Correlation Between Jerónimo Martins and STELLA JONES

Can any of the company-specific risk be diversified away by investing in both Jerónimo Martins and STELLA JONES 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 Jerónimo Martins and STELLA JONES 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 STELLA JONES INC, you can compare the effects of market volatilities on Jerónimo Martins and STELLA JONES 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 Jerónimo Martins with a short position of STELLA JONES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jerónimo Martins and STELLA JONES.

Diversification Opportunities for Jerónimo Martins and STELLA JONES

0.66

Correlation Coefficient

Jerónimo Martins  STELLA JONES

Poor diversification

The 3 months correlation between Jerónimo and STELLA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jernimo Martins SGPS and STELLA JONES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STELLA JONES INC and Jerónimo 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 STELLA JONES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STELLA JONES INC has no effect on the direction of Jerónimo Martins i.e., Jerónimo Martins and STELLA JONES go up and down completely randomly.

Pair Corralation between Jerónimo Martins and STELLA JONES

Assuming the 90 days horizon Jerónimo Martins is expected to generate 3.99 times less return on investment than STELLA JONES. But when comparing it to its historical volatility, Jernimo Martins SGPS is 1.13 times less risky than STELLA JONES. It trades about 0.05 of its potential returns per unit of risk. STELLA JONES INC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,203  in STELLA JONES INC on April 24, 2025 and sell it today you would earn a total of  777.00  from holding STELLA JONES INC or generate 18.49% return on investment over 90 days.

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

Jernimo Martins SGPS  vs.  STELLA JONES INC

Jernimo Martins SGPS

Risk-Adjusted Performance

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 stable basic indicators, Jerónimo Martins is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

STELLA JONES INC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STELLA JONES INC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, STELLA JONES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jerónimo Martins and STELLA JONES

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

The idea behind Jernimo Martins SGPS and STELLA JONES INC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.