Correlation Between Sea and Jumia Technologies

Can any of the company-specific risk be diversified away by investing in both Sea and Jumia Technologies 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 Sea and Jumia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sea and Jumia Technologies AG, you can compare the effects of market volatilities on Sea and Jumia Technologies 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 Sea with a short position of Jumia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Jumia Technologies.

Diversification Opportunities for Sea and Jumia Technologies

-0.55

Correlation Coefficient

Sea  Jumia Technologies

Excellent diversification

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

Pair Corralation between Sea and Jumia Technologies

Allowing for the 90-day total investment horizon Sea is expected to generate 0.58 times more return on investment than Jumia Technologies. However, Sea is 1.71 times less risky than Jumia Technologies. It trades about 0.11 of its potential returns per unit of risk. Jumia Technologies AG is currently generating about -0.13 per unit of risk. If you would invest  10,872  in Sea on December 27, 2024 and sell it today you would earn a total of  2,055  from holding Sea or generate 18.9% return on investment over 90 days.

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

Sea  vs.  Jumia Technologies AG

Sea

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Sea and Jumia Technologies

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

The idea behind Sea and Jumia Technologies AG 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.