Correlation Between Delivery Hero and ASOS Plc

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

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

Diversification Opportunities for Delivery Hero and ASOS Plc

0.31

Correlation Coefficient

Delivery Hero  ASOS Plc

Weak diversification

The 3 months correlation between Delivery and ASOS is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Delivery Hero SE and ASOS Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS Plc and Delivery Hero 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 Delivery Hero SE are associated (or correlated) with ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS Plc has no effect on the direction of Delivery Hero i.e., Delivery Hero and ASOS Plc go up and down completely randomly.

Pair Corralation between Delivery Hero and ASOS Plc

Assuming the 90 days horizon Delivery Hero SE is expected to under-perform the ASOS Plc. In addition to that, Delivery Hero is 3.52 times more volatile than ASOS Plc. It trades about -0.07 of its total potential returns per unit of risk. ASOS Plc is currently generating about -0.11 per unit of volatility. If you would invest  510.00  in ASOS Plc on December 21, 2024 and sell it today you would lose (37.00) from holding ASOS Plc or give up 7.25% of portfolio value over 90 days.

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

Delivery Hero SE  vs.  ASOS Plc

Delivery Hero SE

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Delivery Hero and ASOS Plc

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

The idea behind Delivery Hero SE and ASOS Plc 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 Global Correlations module to find global opportunities by holding instruments from different markets.