Correlation Between ASOS Plc and Allegroeu

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

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

Diversification Opportunities for ASOS Plc and Allegroeu

-0.79

Correlation Coefficient

ASOS Plc  Allegroeu

Pay attention - limited upside

The 3 months correlation between ASOS and Allegroeu is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ASOS Plc and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA and ASOS Plc 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 ASOS Plc are associated (or correlated) with Allegroeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegroeu SA has no effect on the direction of ASOS Plc i.e., ASOS Plc and Allegroeu go up and down completely randomly.

Pair Corralation between ASOS Plc and Allegroeu

Assuming the 90 days horizon ASOS Plc is expected to under-perform the Allegroeu. But the pink sheet apears to be less risky and, when comparing its historical volatility, ASOS Plc is 1.64 times less risky than Allegroeu. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Allegroeu SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  671.00  in Allegroeu SA on December 29, 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ASOS Plc  vs.  Allegroeu SA

ASOS Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASOS Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with ASOS Plc and Allegroeu

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

The idea behind ASOS Plc and Allegroeu SA 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.