Correlation Between ZALANDO SE and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both ZALANDO SE and Alibaba Group 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 Alibaba Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZALANDO SE ADR and Alibaba Group Holding, you can compare the effects of market volatilities on ZALANDO SE and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZALANDO SE and Alibaba Group.
Diversification Opportunities for ZALANDO SE and Alibaba Group
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ZALANDO and Alibaba is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ZALANDO SE ADR and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 ADR are associated (or correlated) with Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of ZALANDO SE i.e., ZALANDO SE and Alibaba Group go up and down completely randomly.
Pair Corralation between ZALANDO SE and Alibaba Group
Assuming the 90 days horizon ZALANDO SE ADR is expected to generate 0.71 times more return on investment than Alibaba Group. However, ZALANDO SE ADR is 1.42 times less risky than Alibaba Group. It trades about -0.02 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.17 per unit of risk. If you would invest 1,556 in ZALANDO SE ADR on August 29, 2024 and sell it today you would lose (32.00) from holding ZALANDO SE ADR or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZALANDO SE ADR vs. Alibaba Group Holding
Performance |
| Timeline |
| ZALANDO SE ADR |
| Alibaba Group Holding |
ZALANDO SE and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZALANDO SE and Alibaba Group
The main advantage of trading using opposite ZALANDO SE and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZALANDO SE position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| ZALANDO SE vs. ASOS Plc | ZALANDO SE vs. BoohooCom PLC ADR | ZALANDO SE vs. Allegroeu SA | ZALANDO SE vs. AKA Brands Holding |
| Alibaba Group vs. Meituan ADR | Alibaba Group vs. Meituan | Alibaba Group vs. Qurate Retail Series | Alibaba Group vs. ThredUp |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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