Correlation Between IPower and Jumia Technologies

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

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

Diversification Opportunities for IPower and Jumia Technologies

0.39

Correlation Coefficient

IPower  Jumia Technologies

Weak diversification

The 3 months correlation between IPower and Jumia is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iPower Inc and Jumia Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jumia Technologies and IPower 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 iPower Inc 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 IPower i.e., IPower and Jumia Technologies go up and down completely randomly.

Pair Corralation between IPower and Jumia Technologies

Considering the 90-day investment horizon IPower is expected to generate 1.15 times less return on investment than Jumia Technologies. In addition to that, IPower is 1.33 times more volatile than Jumia Technologies AG. It trades about 0.01 of its total potential returns per unit of risk. Jumia Technologies AG is currently generating about 0.01 per unit of volatility. If you would invest  699.00  in Jumia Technologies AG on January 25, 2024 and sell it today you would lose (236.00) from holding Jumia Technologies AG or give up 33.76% of portfolio value over 90 days.

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

iPower Inc  vs.  Jumia Technologies AG

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Jumia Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jumia Technologies AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Jumia Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IPower and Jumia Technologies

The main advantage of trading using opposite IPower and Jumia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPower 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 iPower Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.