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, 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
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JD and Zalando is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding JD Inc Adr and Zalando SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zalando SE 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 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 under-perform the Zalando SE. In addition to that, JD is 6.42 times more volatile than Zalando SE. It trades about -0.06 of its total potential returns per unit of risk. Zalando SE is currently generating about 0.3 per unit of volatility. If you would invest 2,818 in Zalando SE on September 4, 2024 and sell it today you would earn a total of 101.00 from holding Zalando SE or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Inc Adr vs. Zalando SE
Performance |
| Timeline |
| JD Inc Adr |
| Zalando SE |
JD and Zalando SE Volatility Contrast
Predicted Return Density |
| Returns |
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 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.| Zalando SE vs. TSS, Common Stock | Zalando SE vs. Aquagold International | Zalando SE vs. Morningstar Unconstrained Allocation | Zalando SE vs. High Yield Municipal Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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