Correlation Between INTERSHOP Communications and AEGEAN AIRLINES

Can any of the company-specific risk be diversified away by investing in both INTERSHOP Communications and AEGEAN AIRLINES 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 AEGEAN AIRLINES 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 AEGEAN AIRLINES, you can compare the effects of market volatilities on INTERSHOP Communications and AEGEAN AIRLINES 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 AEGEAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and AEGEAN AIRLINES.

Diversification Opportunities for INTERSHOP Communications and AEGEAN AIRLINES

-0.7

Correlation Coefficient

INTERSHOP Communications  AEGEAN AIRLINES

Excellent diversification

The 3 months correlation between INTERSHOP and AEGEAN is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and AEGEAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEGEAN AIRLINES 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 AEGEAN AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEGEAN AIRLINES has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and AEGEAN AIRLINES go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and AEGEAN AIRLINES

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 1.63 times more return on investment than AEGEAN AIRLINES. However, INTERSHOP Communications is 1.63 times more volatile than AEGEAN AIRLINES. It trades about 0.08 of its potential returns per unit of risk. AEGEAN AIRLINES is currently generating about 0.04 per unit of risk. If you would invest  164.00  in INTERSHOP Communications Aktiengesellschaft on October 11, 2024 and sell it today you would earn a total of  16.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 9.76% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  AEGEAN AIRLINES

INTERSHOP Communications

Risk-Adjusted Performance

6 of 100

Modest

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 uncertain basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AEGEAN AIRLINES

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AEGEAN AIRLINES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with INTERSHOP Communications and AEGEAN AIRLINES

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

The idea behind INTERSHOP Communications Aktiengesellschaft and AEGEAN AIRLINES 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.