Correlation Between Amdocs and INTERSHOP Communications

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

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

Diversification Opportunities for Amdocs and INTERSHOP Communications

0.32

Correlation Coefficient

Amdocs  INTERSHOP Communications

Weak diversification

The 3 months correlation between Amdocs and INTERSHOP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs Limited and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and Amdocs 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 Amdocs Limited 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 Amdocs i.e., Amdocs and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Amdocs and INTERSHOP Communications

Assuming the 90 days trading horizon Amdocs Limited is expected to generate 0.46 times more return on investment than INTERSHOP Communications. However, Amdocs Limited is 2.16 times less risky than INTERSHOP Communications. It trades about -0.06 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about -0.09 per unit of risk. If you would invest  8,192  in Amdocs Limited on October 10, 2024 and sell it today you would lose (112.00) from holding Amdocs Limited or give up 1.37% of portfolio value over 90 days.

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

Amdocs Limited  vs.  INTERSHOP Communications Aktie

Amdocs Limited

Risk-Adjusted Performance

5 of 100

Modest

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

INTERSHOP Communications

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amdocs and INTERSHOP Communications

The main advantage of trading using opposite Amdocs and INTERSHOP Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amdocs 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 Amdocs Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.