Correlation Between Alibaba Group and Jumia Technologies
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and Jumia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Jumia Technologies AG, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of Jumia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Jumia Technologies.
Diversification Opportunities for Alibaba Group and Jumia Technologies
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alibaba and Jumia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Jumia Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumia Technologies and Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and Jumia Technologies go up and down completely randomly.
Pair Corralation between Alibaba Group and Jumia Technologies
Given the investment horizon of 90 days Alibaba Group Holding is expected to generate 0.43 times more return on investment than Jumia Technologies. However, Alibaba Group Holding is 2.33 times less risky than Jumia Technologies. It trades about -0.32 of its potential returns per unit of risk. Jumia Technologies AG is currently generating about -0.17 per unit of risk. If you would invest 9,993 in Alibaba Group Holding on August 27, 2024 and sell it today you would lose (1,435) from holding Alibaba Group Holding or give up 14.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Jumia Technologies AG
Performance |
| Timeline |
| Alibaba Group Holding |
| Jumia Technologies |
Alibaba Group and Jumia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Jumia Technologies
The main advantage of trading using opposite Alibaba Group and Jumia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| Jumia Technologies vs. Sea | Jumia Technologies vs. Wayfair | Jumia Technologies vs. Chewy Inc | Jumia Technologies vs. Vipshop Holdings Limited |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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