Correlation Between ZALANDO SE and Allegroeu

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

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

Diversification Opportunities for ZALANDO SE and Allegroeu

0.23

Correlation Coefficient

ZALANDO SE  Allegroeu

Modest diversification

The 3 months correlation between ZALANDO and Allegroeu is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ZALANDO SE ADR and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA and ZALANDO SE 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 ZALANDO SE ADR 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 ZALANDO SE i.e., ZALANDO SE and Allegroeu go up and down completely randomly.

Pair Corralation between ZALANDO SE and Allegroeu

Assuming the 90 days horizon ZALANDO SE is expected to generate 2.27 times less return on investment than Allegroeu. In addition to that, ZALANDO SE is 1.63 times more volatile than Allegroeu SA. It trades about 0.03 of its total potential returns per unit of risk. Allegroeu SA is currently generating about 0.13 per unit of volatility. 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

ZALANDO SE ADR  vs.  Allegroeu SA

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.

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 ZALANDO SE and Allegroeu

The main advantage of trading using opposite ZALANDO SE and Allegroeu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZALANDO SE 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 ZALANDO SE ADR 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.