Correlation Between ZALANDO SE and PDD Holdings
Can any of the company-specific risk be diversified away by investing in both ZALANDO SE and PDD Holdings 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 PDD Holdings 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 PDD Holdings, you can compare the effects of market volatilities on ZALANDO SE and PDD Holdings 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 PDD Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZALANDO SE and PDD Holdings.
Diversification Opportunities for ZALANDO SE and PDD Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZALANDO and PDD is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ZALANDO SE ADR and PDD Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDD Holdings 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 PDD Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDD Holdings has no effect on the direction of ZALANDO SE i.e., ZALANDO SE and PDD Holdings go up and down completely randomly.
Pair Corralation between ZALANDO SE and PDD Holdings
Assuming the 90 days horizon ZALANDO SE ADR is expected to generate 0.82 times more return on investment than PDD Holdings. However, ZALANDO SE ADR is 1.22 times less risky than PDD Holdings. It trades about -0.02 of its potential returns per unit of risk. PDD Holdings is currently generating about -0.32 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZALANDO SE ADR vs. PDD Holdings
Performance |
| Timeline |
| ZALANDO SE ADR |
| PDD Holdings |
ZALANDO SE and PDD Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZALANDO SE and PDD Holdings
The main advantage of trading using opposite ZALANDO SE and PDD Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZALANDO SE position performs unexpectedly, PDD Holdings 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 PDD Holdings will offset losses from the drop in PDD Holdings' long position.| ZALANDO SE vs. ASOS Plc | ZALANDO SE vs. BoohooCom PLC ADR | ZALANDO SE vs. Allegroeu SA | ZALANDO SE vs. AKA Brands Holding |
| PDD Holdings vs. Alibaba Group Holding | PDD Holdings vs. Sea | PDD Holdings vs. MercadoLibre | PDD Holdings vs. Vipshop Holdings Limited |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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