Correlation Between ZALANDO SE and Z Holdings

Can any of the company-specific risk be diversified away by investing in both ZALANDO SE and Z 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 Z 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 Z Holdings Corp, you can compare the effects of market volatilities on ZALANDO SE and Z 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 Z Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZALANDO SE and Z Holdings.

Diversification Opportunities for ZALANDO SE and Z Holdings

-0.83

Correlation Coefficient

ZALANDO SE  Z Holdings

Pay attention - limited upside

The 3 months correlation between ZALANDO and YAHOY is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding ZALANDO SE ADR and Z Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Z Holdings Corp 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 Z Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Z Holdings Corp has no effect on the direction of ZALANDO SE i.e., ZALANDO SE and Z Holdings go up and down completely randomly.

Pair Corralation between ZALANDO SE and Z Holdings

Assuming the 90 days horizon ZALANDO SE ADR is expected to under-perform the Z Holdings. In addition to that, ZALANDO SE is 1.69 times more volatile than Z Holdings Corp. It trades about -0.04 of its total potential returns per unit of risk. Z Holdings Corp is currently generating about -0.02 per unit of volatility. If you would invest  567.00  in Z Holdings Corp on February 7, 2024 and sell it today you would lose (81.00) from holding Z Holdings Corp or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ZALANDO SE ADR  vs.  Z Holdings Corp

ZALANDO SE ADR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZALANDO SE ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, ZALANDO SE showed solid returns over the last few months and may actually be approaching a breakup point.

Z Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Z Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ZALANDO SE and Z Holdings

The main advantage of trading using opposite ZALANDO SE and Z Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZALANDO SE position performs unexpectedly, Z 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 Z Holdings will offset losses from the drop in Z Holdings' long position.

The idea behind ZALANDO SE ADR and Z Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.