Correlation Between MercadoLibre and ASOS Plc
Can any of the company-specific risk be diversified away by investing in both MercadoLibre 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 MercadoLibre and ASOS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and ASOS Plc, you can compare the effects of market volatilities on MercadoLibre 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 MercadoLibre with a short position of ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and ASOS Plc.
Diversification Opportunities for MercadoLibre and ASOS Plc
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MercadoLibre and ASOS is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre and ASOS Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS Plc and MercadoLibre 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 MercadoLibre 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 MercadoLibre i.e., MercadoLibre and ASOS Plc go up and down completely randomly.
Pair Corralation between MercadoLibre and ASOS Plc
If you would invest 541.00 in ASOS Plc on September 1, 2024 and sell it today you would earn a total of 0.00 from holding ASOS Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MercadoLibre vs. ASOS Plc
Performance |
| Timeline |
| MercadoLibre |
| ASOS Plc |
MercadoLibre and ASOS Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MercadoLibre and ASOS Plc
The main advantage of trading using opposite MercadoLibre and ASOS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre 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.| MercadoLibre vs. PDD Holdings | MercadoLibre vs. JD Inc Adr | MercadoLibre vs. Alibaba Group Holding | MercadoLibre vs. Global E Online |
| ASOS Plc vs. BoohooCom PLC ADR | ASOS Plc vs. Allegroeu SA | ASOS Plc vs. ZALANDO SE ADR | ASOS Plc vs. AKA Brands Holding |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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