Correlation Between INTERSHOP Communications and CENTURIA OFFICE

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

Diversification Opportunities for INTERSHOP Communications and CENTURIA OFFICE

-0.31

Correlation Coefficient

INTERSHOP Communications  CENTURIA OFFICE

Very good diversification

The 3 months correlation between INTERSHOP and CENTURIA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT 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 CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and CENTURIA OFFICE go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and CENTURIA OFFICE

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 1.48 times more return on investment than CENTURIA OFFICE. However, INTERSHOP Communications is 1.48 times more volatile than CENTURIA OFFICE REIT. It trades about 0.02 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about -0.22 per unit of risk. If you would invest  172.00  in INTERSHOP Communications Aktiengesellschaft on October 5, 2024 and sell it today you would earn a total of  3.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 1.74% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  CENTURIA OFFICE REIT

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, INTERSHOP Communications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

CENTURIA OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INTERSHOP Communications and CENTURIA OFFICE

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

The idea behind INTERSHOP Communications Aktiengesellschaft and CENTURIA OFFICE REIT 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..