Correlation Between MSAD INSURANCE and INTERSHOP Communications

Can any of the company-specific risk be diversified away by investing in both MSAD INSURANCE and INTERSHOP Communications 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 MSAD INSURANCE and INTERSHOP Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MSAD INSURANCE and INTERSHOP Communications Aktiengesellschaft, you can compare the effects of market volatilities on MSAD INSURANCE and INTERSHOP Communications 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 MSAD INSURANCE with a short position of INTERSHOP Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD INSURANCE and INTERSHOP Communications.

Diversification Opportunities for MSAD INSURANCE and INTERSHOP Communications

0.31

Correlation Coefficient

MSAD INSURANCE  INTERSHOP Communications

Weak diversification

The 3 months correlation between MSAD and INTERSHOP is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MSAD INSURANCE and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and MSAD INSURANCE 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 MSAD INSURANCE are associated (or correlated) with INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of MSAD INSURANCE i.e., MSAD INSURANCE and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between MSAD INSURANCE and INTERSHOP Communications

Assuming the 90 days trading horizon MSAD INSURANCE is expected to generate 0.52 times more return on investment than INTERSHOP Communications. However, MSAD INSURANCE is 1.92 times less risky than INTERSHOP Communications. It trades about 0.07 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about 0.02 per unit of risk. If you would invest  2,040  in MSAD INSURANCE on September 15, 2024 and sell it today you would earn a total of  120.00  from holding MSAD INSURANCE or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MSAD INSURANCE  vs.  INTERSHOP Communications Aktie

MSAD INSURANCE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MSAD INSURANCE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MSAD INSURANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

INTERSHOP Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, INTERSHOP Communications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MSAD INSURANCE and INTERSHOP Communications

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

The idea behind MSAD INSURANCE and INTERSHOP Communications Aktiengesellschaft 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.