Correlation Between Allreal Holding and Intershop Holding

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

By analyzing existing cross correlation between Allreal Holding and Intershop Holding AG, you can compare the effects of market volatilities on Allreal Holding and Intershop Holding 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 Allreal Holding with a short position of Intershop Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allreal Holding and Intershop Holding.

Diversification Opportunities for Allreal Holding and Intershop Holding

0.64

Correlation Coefficient

Allreal Holding  Intershop Holding

Poor diversification

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

Pair Corralation between Allreal Holding and Intershop Holding

Assuming the 90 days trading horizon Allreal Holding is expected to generate 0.86 times more return on investment than Intershop Holding. However, Allreal Holding is 1.16 times less risky than Intershop Holding. It trades about 0.22 of its potential returns per unit of risk. Intershop Holding AG is currently generating about 0.13 per unit of risk. If you would invest  16,560  in Allreal Holding on December 30, 2024 and sell it today you would earn a total of  1,800  from holding Allreal Holding or generate 10.87% return on investment over 90 days.

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

Allreal Holding  vs.  Intershop Holding AG

Allreal Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allreal Holding are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Allreal Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Intershop Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intershop Holding AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Intershop Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Allreal Holding and Intershop Holding

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

The idea behind Allreal Holding and Intershop Holding AG 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.