Correlation Between Jumia Technologies and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both Jumia Technologies and MercadoLibre 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 MercadoLibre 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 MercadoLibre, you can compare the effects of market volatilities on Jumia Technologies and MercadoLibre 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 MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jumia Technologies and MercadoLibre.
Diversification Opportunities for Jumia Technologies and MercadoLibre
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jumia and MercadoLibre is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Jumia Technologies AG and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre 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 MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of Jumia Technologies i.e., Jumia Technologies and MercadoLibre go up and down completely randomly.
Pair Corralation between Jumia Technologies and MercadoLibre
Given the investment horizon of 90 days Jumia Technologies AG is expected to generate 2.52 times more return on investment than MercadoLibre. However, Jumia Technologies is 2.52 times more volatile than MercadoLibre. It trades about 0.04 of its potential returns per unit of risk. MercadoLibre is currently generating about 0.06 per unit of risk. If you would invest 377.00 in Jumia Technologies AG on November 2, 2024 and sell it today you would earn a total of 44.00 from holding Jumia Technologies AG or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jumia Technologies AG vs. MercadoLibre
Performance |
| Timeline |
| Jumia Technologies |
| MercadoLibre |
Jumia Technologies and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jumia Technologies and MercadoLibre
The main advantage of trading using opposite Jumia Technologies and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jumia Technologies position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.| Jumia Technologies vs. Sea | Jumia Technologies vs. MercadoLibre | Jumia Technologies vs. PDD Holdings | Jumia Technologies vs. JD Inc Adr |
| MercadoLibre vs. PDD Holdings | MercadoLibre vs. JD Inc Adr | MercadoLibre vs. Alibaba Group Holding | MercadoLibre vs. Global E Online |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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