Correlation Between ZALANDO SE and Bravada Intl

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

Diversification Opportunities for ZALANDO SE and Bravada Intl

0.0

Correlation Coefficient

ZALANDO SE  Bravada Intl

Pay attention - limited upside

The 3 months correlation between ZALANDO and Bravada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ZALANDO SE ADR and Bravada Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Intl 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 Bravada Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Intl has no effect on the direction of ZALANDO SE i.e., ZALANDO SE and Bravada Intl go up and down completely randomly.

Pair Corralation between ZALANDO SE and Bravada Intl

If you would invest  1,247  in ZALANDO SE ADR on September 5, 2024 and sell it today you would earn a total of  361.00  from holding ZALANDO SE ADR or generate 28.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ZALANDO SE ADR  vs.  Bravada Intl

ZALANDO SE ADR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZALANDO SE ADR are ranked lower than 13 (%) 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.

Bravada Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bravada Intl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bravada Intl is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ZALANDO SE and Bravada Intl

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

The idea behind ZALANDO SE ADR and Bravada Intl 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.