Correlation Between Jumia Technologies and Vipshop Holdings

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

Diversification Opportunities for Jumia Technologies and Vipshop Holdings

-0.8

Correlation Coefficient

Jumia Technologies  Vipshop Holdings

Pay attention - limited upside

The 3 months correlation between Jumia and Vipshop is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and Vipshop Holdings go up and down completely randomly.

Pair Corralation between Jumia Technologies and Vipshop Holdings

Given the investment horizon of 90 days Jumia Technologies AG is expected to under-perform the Vipshop Holdings. In addition to that, Jumia Technologies is 1.76 times more volatile than Vipshop Holdings Limited. It trades about -0.14 of its total potential returns per unit of risk. Vipshop Holdings Limited is currently generating about 0.13 per unit of volatility. If you would invest  1,328  in Vipshop Holdings Limited on December 29, 2024 and sell it today you would earn a total of  285.00  from holding Vipshop Holdings Limited or generate 21.46% return on investment over 90 days.

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

Jumia Technologies AG  vs.  Vipshop Holdings Limited

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Vipshop Holdings

Risk-Adjusted Performance

OK

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

Pair Trading with Jumia Technologies and Vipshop Holdings

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

The idea behind Jumia Technologies AG and Vipshop Holdings Limited 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.