Correlation Between MEITUAN UNSPADR/2B and Zalando SE
Can any of the company-specific risk be diversified away by investing in both MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B and Zalando SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEITUAN UNSPADR2B and Zalando SE, you can compare the effects of market volatilities on MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR/2B with a short position of Zalando SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEITUAN UNSPADR/2B and Zalando SE.
Diversification Opportunities for MEITUAN UNSPADR/2B and Zalando SE
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MEITUAN and Zalando is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MEITUAN UNSPADR2B and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE and MEITUAN UNSPADR/2B 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 MEITUAN UNSPADR2B 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 has no effect on the direction of MEITUAN UNSPADR/2B i.e., MEITUAN UNSPADR/2B and Zalando SE go up and down completely randomly.
Pair Corralation between MEITUAN UNSPADR/2B and Zalando SE
Assuming the 90 days trading horizon MEITUAN UNSPADR2B is expected to under-perform the Zalando SE. In addition to that, MEITUAN UNSPADR/2B is 1.69 times more volatile than Zalando SE. It trades about -0.02 of its total potential returns per unit of risk. Zalando SE is currently generating about 0.14 per unit of volatility. If you would invest 2,762 in Zalando SE on September 1, 2024 and sell it today you would earn a total of 180.00 from holding Zalando SE or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEITUAN UNSPADR2B vs. Zalando SE
Performance |
| Timeline |
| MEITUAN UNSPADR/2B |
| Zalando SE |
MEITUAN UNSPADR/2B and Zalando SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEITUAN UNSPADR/2B and Zalando SE
The main advantage of trading using opposite MEITUAN UNSPADR/2B and Zalando SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEITUAN UNSPADR/2B 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.| MEITUAN UNSPADR/2B vs. Tencent Holdings | MEITUAN UNSPADR/2B vs. Baidu Inc | MEITUAN UNSPADR/2B vs. BYD Company Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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