Correlation Between Global E and Jumia Technologies

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

By analyzing existing cross correlation between Global E Online and Jumia Technologies AG, you can compare the effects of market volatilities on Global E and Jumia 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 Global E with a short position of Jumia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Jumia Technologies.

Diversification Opportunities for Global E and Jumia Technologies

-0.33

Correlation Coefficient

Global E  Jumia Technologies

Very good diversification

The 3 months correlation between Global and Jumia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Jumia Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumia Technologies and Global E 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 Global E Online are associated (or correlated) with Jumia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jumia Technologies has no effect on the direction of Global E i.e., Global E and Jumia Technologies go up and down completely randomly.

Pair Corralation between Global E and Jumia Technologies

Given the investment horizon of 90 days Global E Online is expected to under-perform the Jumia Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Global E Online is 1.81 times less risky than Jumia Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The Jumia Technologies AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Jumia Technologies AG on March 7, 2024 and sell it today you would earn a total of  35.00  from holding Jumia Technologies AG or generate 5.07% return on investment over 90 days.

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

Global E Online  vs.  Jumia Technologies AG

Global E Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Jumia Technologies

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jumia Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent forward indicators, Jumia Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global E and Jumia Technologies

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

The idea behind Global E Online and Jumia Technologies AG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.