Correlation Between JD and ZALANDO SE

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

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

Diversification Opportunities for JD and ZALANDO SE

0.49

Correlation Coefficient

JD  ZALANDO SE

Very weak diversification

The 3 months correlation between JD and ZALANDO is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr 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 JD 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 JD Inc Adr 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 JD i.e., JD and ZALANDO SE go up and down completely randomly.

Pair Corralation between JD and ZALANDO SE

Allowing for the 90-day total investment horizon JD Inc Adr is expected to generate 1.18 times more return on investment than ZALANDO SE. However, JD is 1.18 times more volatile than ZALANDO SE ADR. It trades about 0.09 of its potential returns per unit of risk. ZALANDO SE ADR is currently generating about 0.0 per unit of risk. If you would invest  3,613  in JD Inc Adr on December 26, 2024 and sell it today you would earn a total of  565.50  from holding JD Inc Adr or generate 15.65% return on investment over 90 days.

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

JD Inc Adr  vs.  ZALANDO SE ADR

JD Inc Adr

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc Adr are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, JD exhibited solid returns over the last few months and may actually be approaching a breakup point.

ZALANDO SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZALANDO SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. 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 JD and ZALANDO SE

The main advantage of trading using opposite JD and ZALANDO SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD 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 JD Inc Adr 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.