Correlation Between Zalando SE and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both Zalando SE and THORNEY TECHS 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 THORNEY TECHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalando SE and THORNEY TECHS LTD, you can compare the effects of market volatilities on Zalando SE and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalando SE and THORNEY TECHS.
Diversification Opportunities for Zalando SE and THORNEY TECHS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zalando and THORNEY is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Zalando SE and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 are associated (or correlated) with THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Zalando SE i.e., Zalando SE and THORNEY TECHS go up and down completely randomly.
Pair Corralation between Zalando SE and THORNEY TECHS
Assuming the 90 days horizon Zalando SE is expected to generate 0.54 times more return on investment than THORNEY TECHS. However, Zalando SE is 1.84 times less risky than THORNEY TECHS. It trades about 0.01 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about -0.01 per unit of risk. If you would invest 3,118 in Zalando SE on August 30, 2024 and sell it today you would lose (258.00) from holding Zalando SE or give up 8.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zalando SE vs. THORNEY TECHS LTD
Performance |
| Timeline |
| Zalando SE |
| THORNEY TECHS LTD |
Zalando SE and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalando SE and THORNEY TECHS
The main advantage of trading using opposite Zalando SE and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalando SE position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| Zalando SE vs. ALTAIR RES INC | Zalando SE vs. RYU Apparel | Zalando SE vs. MYFAIR GOLD P | Zalando SE vs. HF SINCLAIR P |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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