Correlation Between INTERSHOP Communications and AMP

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

Diversification Opportunities for INTERSHOP Communications and AMP

-0.01

Correlation Coefficient

INTERSHOP Communications  AMP

Good diversification

The 3 months correlation between INTERSHOP and AMP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and AMP Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP Limited 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP Limited has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and AMP go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and AMP

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 1.79 times less return on investment than AMP. In addition to that, INTERSHOP Communications is 1.14 times more volatile than AMP Limited. It trades about 0.03 of its total potential returns per unit of risk. AMP Limited is currently generating about 0.07 per unit of volatility. If you would invest  90.00  in AMP Limited on October 20, 2024 and sell it today you would earn a total of  6.00  from holding AMP Limited or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

INTERSHOP Communications Aktie  vs.  AMP Limited

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

AMP Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMP Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INTERSHOP Communications and AMP

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

The idea behind INTERSHOP Communications Aktiengesellschaft and AMP Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.