Correlation Between Internet Thailand and INTERSHOP Communications

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

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

Diversification Opportunities for Internet Thailand and INTERSHOP Communications

0.37

Correlation Coefficient

Internet Thailand  INTERSHOP Communications

Weak diversification

The 3 months correlation between Internet and INTERSHOP is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Internet Thailand PCL and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and Internet Thailand 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 Internet Thailand PCL 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 Internet Thailand i.e., Internet Thailand and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Internet Thailand and INTERSHOP Communications

Assuming the 90 days trading horizon Internet Thailand PCL is expected to generate 2.11 times more return on investment than INTERSHOP Communications. However, Internet Thailand is 2.11 times more volatile than INTERSHOP Communications Aktiengesellschaft. It trades about -0.04 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about -0.28 per unit of risk. If you would invest  19.00  in Internet Thailand PCL on September 17, 2024 and sell it today you would lose (1.00) from holding Internet Thailand PCL or give up 5.26% of portfolio value over 90 days.

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

Internet Thailand PCL  vs.  INTERSHOP Communications Aktie

Internet Thailand PCL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand PCL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Internet Thailand unveiled solid returns over the last few months and may actually be approaching a breakup point.

INTERSHOP Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 2 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Internet Thailand and INTERSHOP Communications

The main advantage of trading using opposite Internet Thailand and INTERSHOP Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Thailand 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 Internet Thailand PCL 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.