Correlation Between Jd Com Inc and ZALANDO SE

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Can any of the company-specific risk be diversified away by investing in both Jd Com Inc and ZALANDO SE 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 Jd Com Inc and ZALANDO SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jd Com Inc and ZALANDO SE ADR, you can compare the effects of market volatilities on Jd Com Inc and ZALANDO SE 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 Jd Com Inc with a short position of ZALANDO SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jd Com Inc and ZALANDO SE.

Diversification Opportunities for Jd Com Inc and ZALANDO SE

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between JDCMF and ZALANDO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jd Com Inc and ZALANDO SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZALANDO SE ADR and Jd Com Inc 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 Jd Com Inc are associated (or correlated) with ZALANDO SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZALANDO SE ADR has no effect on the direction of Jd Com Inc i.e., Jd Com Inc and ZALANDO SE go up and down completely randomly.

Pair Corralation between Jd Com Inc and ZALANDO SE

Assuming the 90 days horizon Jd Com Inc is expected to generate 2.99 times more return on investment than ZALANDO SE. However, Jd Com Inc is 2.99 times more volatile than ZALANDO SE ADR. It trades about 0.09 of its potential returns per unit of risk. ZALANDO SE ADR is currently generating about 0.26 per unit of risk. If you would invest  1,316  in Jd Com Inc on September 10, 2024 and sell it today you would earn a total of  439.00  from holding Jd Com Inc or generate 33.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Jd Com Inc  vs.  ZALANDO SE ADR

 Performance 
       Timeline  
Jd Com Inc 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Jd Com Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, Jd Com Inc reported solid returns over the last few months and may actually be approaching a breakup point.
ZALANDO SE ADR 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ZALANDO SE ADR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, ZALANDO SE showed solid returns over the last few months and may actually be approaching a breakup point.

Jd Com Inc and ZALANDO SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jd Com Inc and ZALANDO SE

The main advantage of trading using opposite Jd Com Inc and ZALANDO SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jd Com Inc position performs unexpectedly, ZALANDO SE 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 ZALANDO SE will offset losses from the drop in ZALANDO SE's long position.
The idea behind Jd Com Inc and ZALANDO SE ADR 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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