Correlation Between ASOS Plc and Delivery Hero

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

By analyzing existing cross correlation between ASOS Plc and Delivery Hero SE, you can compare the effects of market volatilities on ASOS Plc and Delivery Hero 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 Delivery Hero. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASOS Plc and Delivery Hero.

Diversification Opportunities for ASOS Plc and Delivery Hero

0.43

Correlation Coefficient

ASOS Plc  Delivery Hero

Very weak diversification

The 3 months correlation between ASOS and Delivery is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ASOS Plc and Delivery Hero SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delivery Hero SE 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 Delivery Hero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delivery Hero SE has no effect on the direction of ASOS Plc i.e., ASOS Plc and Delivery Hero go up and down completely randomly.

Pair Corralation between ASOS Plc and Delivery Hero

Assuming the 90 days horizon ASOS Plc is expected to generate 1.04 times more return on investment than Delivery Hero. However, ASOS Plc is 1.04 times more volatile than Delivery Hero SE. It trades about 0.01 of its potential returns per unit of risk. Delivery Hero SE is currently generating about -0.01 per unit of risk. If you would invest  592.00  in ASOS Plc on October 9, 2024 and sell it today you would lose (68.00) from holding ASOS Plc or give up 11.49% of portfolio value over 90 days.

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

ASOS Plc  vs.  Delivery Hero SE

ASOS Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASOS Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, ASOS Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Delivery Hero SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delivery Hero SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ASOS Plc and Delivery Hero

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

The idea behind ASOS Plc and Delivery Hero SE 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.