Correlation Between Jumia Technologies and Amazon

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

Diversification Opportunities for Jumia Technologies and Amazon

-0.55

Correlation Coefficient

Jumia Technologies  Amazon

Excellent diversification

The 3 months correlation between Jumia and Amazon is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and Amazon go up and down completely randomly.

Pair Corralation between Jumia Technologies and Amazon

Given the investment horizon of 90 days Jumia Technologies AG is expected to generate 4.03 times more return on investment than Amazon. However, Jumia Technologies is 4.03 times more volatile than Amazon Inc. It trades about 0.04 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.1 per unit of risk. If you would invest  375.00  in Jumia Technologies AG on September 23, 2024 and sell it today you would earn a total of  28.00  from holding Jumia Technologies AG or generate 7.47% 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.  Amazon Inc

Jumia Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jumia Technologies AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Jumia Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amazon Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jumia Technologies and Amazon

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

The idea behind Jumia Technologies AG and Amazon 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.