Correlation Between Jumia Technologies and Yunji

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

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

Diversification Opportunities for Jumia Technologies and Yunji

-0.52

Correlation Coefficient

Jumia Technologies  Yunji

Excellent diversification

The 3 months correlation between Jumia and Yunji is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and Yunji Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunji Inc and Jumia Technologies 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 Jumia Technologies AG are associated (or correlated) with Yunji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunji Inc has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and Yunji go up and down completely randomly.

Pair Corralation between Jumia Technologies and Yunji

Given the investment horizon of 90 days Jumia Technologies AG is expected to generate 1.72 times more return on investment than Yunji. However, Jumia Technologies is 1.72 times more volatile than Yunji Inc. It trades about 0.27 of its potential returns per unit of risk. Yunji Inc is currently generating about -0.04 per unit of risk. If you would invest  453.00  in Jumia Technologies AG on February 28, 2024 and sell it today you would earn a total of  171.00  from holding Jumia Technologies AG or generate 37.75% return on investment over 90 days.

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

Jumia Technologies AG  vs.  Yunji Inc

Jumia Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jumia Technologies AG are ranked lower than 4 (%) 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.

Yunji Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yunji Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward-looking indicators, Yunji may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Jumia Technologies and Yunji

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

The idea behind Jumia Technologies AG and Yunji 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.