Correlation Between INTERSHOP Communications and Cintas

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

Diversification Opportunities for INTERSHOP Communications and Cintas

0.55

Correlation Coefficient

INTERSHOP Communications  Cintas

Very weak diversification

The 3 months correlation between INTERSHOP and Cintas is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas 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 Cintas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cintas has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Cintas go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Cintas

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 3.58 times less return on investment than Cintas. In addition to that, INTERSHOP Communications is 1.84 times more volatile than Cintas. It trades about 0.02 of its total potential returns per unit of risk. Cintas is currently generating about 0.1 per unit of volatility. If you would invest  11,238  in Cintas on October 4, 2024 and sell it today you would earn a total of  6,497  from holding Cintas or generate 57.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

INTERSHOP Communications Aktie  vs.  Cintas

INTERSHOP Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 5 (%) 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.

Cintas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cintas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cintas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTERSHOP Communications and Cintas

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Cintas 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.