Correlation Between Jumia Technologies and Qurate Retail

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

Diversification Opportunities for Jumia Technologies and Qurate Retail

0.25

Correlation Coefficient

Jumia Technologies  Qurate Retail

Modest diversification

The 3 months correlation between Jumia and Qurate is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and Qurate Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail 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 Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and Qurate Retail go up and down completely randomly.

Pair Corralation between Jumia Technologies and Qurate Retail

Given the investment horizon of 90 days Jumia Technologies AG is expected to generate 1.71 times more return on investment than Qurate Retail. However, Jumia Technologies is 1.71 times more volatile than Qurate Retail. It trades about 0.03 of its potential returns per unit of risk. Qurate Retail is currently generating about 0.05 per unit of risk. If you would invest  394.00  in Jumia Technologies AG on September 2, 2024 and sell it today you would lose (4.00) from holding Jumia Technologies AG or give up 1.02% of portfolio value over 90 days.

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

Jumia Technologies AG  vs.  Qurate Retail

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 latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Qurate Retail

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qurate Retail are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Qurate Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jumia Technologies and Qurate Retail

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

The idea behind Jumia Technologies AG and Qurate Retail 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.