Correlation Between Jumia Technologies and Natural Health

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

Diversification Opportunities for Jumia Technologies and Natural Health

-0.14

Correlation Coefficient

Jumia Technologies  Natural Health

Good diversification

The 3 months correlation between Jumia and Natural is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and Natural Health Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trend 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trend has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and Natural Health go up and down completely randomly.

Pair Corralation between Jumia Technologies and Natural Health

Given the investment horizon of 90 days Jumia Technologies AG is expected to under-perform the Natural Health. In addition to that, Jumia Technologies is 1.79 times more volatile than Natural Health Trend. It trades about -0.09 of its total potential returns per unit of risk. Natural Health Trend is currently generating about -0.06 per unit of volatility. If you would invest  544.00  in Natural Health Trend on November 28, 2024 and sell it today you would lose (72.00) from holding Natural Health Trend or give up 13.24% of portfolio value over 90 days.

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

Jumia Technologies AG  vs.  Natural Health Trend

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.

Natural Health Trend

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Jumia Technologies and Natural Health

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

The idea behind Jumia Technologies AG and Natural Health Trend 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.