Correlation Between PDD Holdings and Jumia Technologies
Can any of the company-specific risk be diversified away by investing in both PDD Holdings 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 PDD Holdings and Jumia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PDD Holdings and Jumia Technologies AG, you can compare the effects of market volatilities on PDD Holdings 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 PDD Holdings with a short position of Jumia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDD Holdings and Jumia Technologies.
Diversification Opportunities for PDD Holdings and Jumia Technologies
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PDD and Jumia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding PDD Holdings and Jumia Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumia Technologies and PDD Holdings 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 PDD Holdings 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 PDD Holdings i.e., PDD Holdings and Jumia Technologies go up and down completely randomly.
Pair Corralation between PDD Holdings and Jumia Technologies
Considering the 90-day investment horizon PDD Holdings is expected to generate 2.16 times less return on investment than Jumia Technologies. But when comparing it to its historical volatility, PDD Holdings is 1.72 times less risky than Jumia Technologies. It trades about 0.03 of its potential returns per unit of risk. Jumia Technologies AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 |
PDD Holdings vs. Jumia Technologies AG
Performance |
| Timeline |
| PDD Holdings |
| Jumia Technologies |
PDD Holdings and Jumia Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PDD Holdings and Jumia Technologies
The main advantage of trading using opposite PDD Holdings and Jumia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PDD Holdings 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.| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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