Correlation Between Allegroeu and ZALANDO SE

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

By analyzing existing cross correlation between Allegroeu SA and ZALANDO SE ADR, you can compare the effects of market volatilities on Allegroeu and ZALANDO SE 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 Allegroeu with a short position of ZALANDO SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegroeu and ZALANDO SE.

Diversification Opportunities for Allegroeu and ZALANDO SE

0.23

Correlation Coefficient

Allegroeu  ZALANDO SE

Modest diversification

The 3 months correlation between Allegroeu and ZALANDO is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Allegroeu SA and ZALANDO SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZALANDO SE ADR and Allegroeu 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 Allegroeu SA are associated (or correlated) with ZALANDO SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZALANDO SE ADR has no effect on the direction of Allegroeu i.e., Allegroeu and ZALANDO SE go up and down completely randomly.

Pair Corralation between Allegroeu and ZALANDO SE

Assuming the 90 days horizon Allegroeu SA is expected to generate 0.62 times more return on investment than ZALANDO SE. However, Allegroeu SA is 1.63 times less risky than ZALANDO SE. It trades about 0.13 of its potential returns per unit of risk. ZALANDO SE ADR is currently generating about 0.03 per unit of risk. If you would invest  671.00  in Allegroeu SA on December 30, 2024 and sell it today you would earn a total of  94.00  from holding Allegroeu SA or generate 14.01% return on investment over 90 days.

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

Allegroeu SA  vs.  ZALANDO SE ADR

Allegroeu SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allegroeu SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Allegroeu reported solid returns over the last few months and may actually be approaching a breakup point.

ZALANDO SE ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZALANDO SE ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, ZALANDO SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allegroeu and ZALANDO SE

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

The idea behind Allegroeu SA and ZALANDO SE ADR 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.