Correlation Between Jumia Technologies and Sea

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

Diversification Opportunities for Jumia Technologies and Sea

-0.31

Correlation Coefficient

Jumia Technologies  Sea

Very good diversification

The 3 months correlation between Jumia and Sea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and Sea go up and down completely randomly.

Pair Corralation between Jumia Technologies and Sea

Given the investment horizon of 90 days Jumia Technologies AG is expected to under-perform the Sea. In addition to that, Jumia Technologies is 1.86 times more volatile than Sea. It trades about -0.03 of its total potential returns per unit of risk. Sea is currently generating about 0.28 per unit of volatility. If you would invest  7,740  in Sea on September 1, 2024 and sell it today you would earn a total of  3,640  from holding Sea or generate 47.03% 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.  Sea

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.

Sea

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 21 (%) 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.

Pair Trading with Jumia Technologies and Sea

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

The idea behind Jumia Technologies AG and Sea 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.