Correlation Between Zalando SE and Medicofarma Biotech
Can any of the company-specific risk be diversified away by investing in both Zalando SE and Medicofarma Biotech 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 Medicofarma Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zalando SE and Medicofarma Biotech SA, you can compare the effects of market volatilities on Zalando SE and Medicofarma Biotech 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 Medicofarma Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zalando SE and Medicofarma Biotech.
Diversification Opportunities for Zalando SE and Medicofarma Biotech
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zalando and Medicofarma is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zalando SE and Medicofarma Biotech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicofarma Biotech 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 Medicofarma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicofarma Biotech has no effect on the direction of Zalando SE i.e., Zalando SE and Medicofarma Biotech go up and down completely randomly.
Pair Corralation between Zalando SE and Medicofarma Biotech
Assuming the 90 days trading horizon Zalando SE is expected to generate 0.61 times more return on investment than Medicofarma Biotech. However, Zalando SE is 1.64 times less risky than Medicofarma Biotech. It trades about 0.03 of its potential returns per unit of risk. Medicofarma Biotech SA is currently generating about -0.03 per unit of risk. If you would invest 11,990 in Zalando SE on September 12, 2024 and sell it today you would earn a total of 2,750 from holding Zalando SE or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.11% |
| Values | Daily Returns |
Zalando SE vs. Medicofarma Biotech SA
Performance |
| Timeline |
| Zalando SE |
| Medicofarma Biotech |
Zalando SE and Medicofarma Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zalando SE and Medicofarma Biotech
The main advantage of trading using opposite Zalando SE and Medicofarma Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zalando SE position performs unexpectedly, Medicofarma Biotech 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 Medicofarma Biotech will offset losses from the drop in Medicofarma Biotech's long position.| Zalando SE vs. Carlson Investments SA | Zalando SE vs. UF Games SA | Zalando SE vs. TEN SQUARE GAMES | Zalando SE vs. 3R Games SA |
| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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