Correlation Between Aluminum and INTERSHOP Communications

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

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

Diversification Opportunities for Aluminum and INTERSHOP Communications

-0.5

Correlation Coefficient

Aluminum  INTERSHOP Communications

Very good diversification

The 3 months correlation between Aluminum and INTERSHOP is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and Aluminum 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 Aluminum of 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 Aluminum i.e., Aluminum and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Aluminum and INTERSHOP Communications

Assuming the 90 days horizon Aluminum of is expected to generate 1.65 times more return on investment than INTERSHOP Communications. However, Aluminum is 1.65 times more volatile than INTERSHOP Communications Aktiengesellschaft. It trades about 0.14 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about 0.03 per unit of risk. If you would invest  55.00  in Aluminum of on October 26, 2024 and sell it today you would earn a total of  4.00  from holding Aluminum of or generate 7.27% return on investment over 90 days.

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

Aluminum of  vs.  INTERSHOP Communications Aktie

Aluminum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aluminum of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Aluminum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERSHOP Communications Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Aluminum and INTERSHOP Communications

The main advantage of trading using opposite Aluminum and INTERSHOP Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum 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 Aluminum of 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.