Correlation Between INTERSHOP Communications and Albemarle

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

Diversification Opportunities for INTERSHOP Communications and Albemarle

0.61

Correlation Coefficient

INTERSHOP Communications  Albemarle

Poor diversification

The 3 months correlation between INTERSHOP and Albemarle is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle 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 Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Albemarle go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Albemarle

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 4.21 times less return on investment than Albemarle. But when comparing it to its historical volatility, INTERSHOP Communications Aktiengesellschaft is 1.54 times less risky than Albemarle. It trades about 0.04 of its potential returns per unit of risk. Albemarle is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,923  in Albemarle on September 14, 2024 and sell it today you would earn a total of  1,844  from holding Albemarle or generate 23.27% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Albemarle

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Albemarle

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Albemarle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and Albemarle

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Albemarle 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.