Correlation Between INTERSHOP Communications and PennantPark Investment

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

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

Diversification Opportunities for INTERSHOP Communications and PennantPark Investment

-0.48

Correlation Coefficient

INTERSHOP Communications  PennantPark Investment

Very good diversification

The 3 months correlation between INTERSHOP and PennantPark is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and INTERSHOP Communications 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 INTERSHOP Communications Aktiengesellschaft are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and PennantPark Investment go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and PennantPark Investment

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 0.83 times more return on investment than PennantPark Investment. However, INTERSHOP Communications Aktiengesellschaft is 1.21 times less risky than PennantPark Investment. It trades about 0.03 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.0 per unit of risk. If you would invest  175.00  in INTERSHOP Communications Aktiengesellschaft on October 26, 2024 and sell it today you would earn a total of  1.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 0.57% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  PennantPark Investment

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.

PennantPark Investment

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PennantPark Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INTERSHOP Communications and PennantPark Investment

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

The idea behind INTERSHOP Communications Aktiengesellschaft and PennantPark Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.