Correlation Between Jumia Technologies and JD

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

Diversification Opportunities for Jumia Technologies and JD

-0.07

Correlation Coefficient

Jumia Technologies  JD

Good diversification

The 3 months correlation between Jumia and JD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and JD Inc Adr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc Adr 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 JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc Adr has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and JD go up and down completely randomly.

Pair Corralation between Jumia Technologies and JD

Given the investment horizon of 90 days Jumia Technologies AG is expected to under-perform the JD. In addition to that, Jumia Technologies is 1.71 times more volatile than JD Inc Adr. It trades about -0.09 of its total potential returns per unit of risk. JD Inc Adr is currently generating about 0.04 per unit of volatility. If you would invest  3,738  in JD Inc Adr on November 28, 2024 and sell it today you would earn a total of  193.00  from holding JD Inc Adr or generate 5.16% return on investment over 90 days.

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

Jumia Technologies AG  vs.  JD Inc Adr

Jumia Technologies

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

JD Inc Adr

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, JD may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Jumia Technologies and JD

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

The idea behind Jumia Technologies AG and JD Inc Adr 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.