Correlation Between INTERSHOP Communications and Data Modul

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

Diversification Opportunities for INTERSHOP Communications and Data Modul

0.61

Correlation Coefficient

INTERSHOP Communications  Data Modul

Poor diversification

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

Pair Corralation between INTERSHOP Communications and Data Modul

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 0.93 times more return on investment than Data Modul. However, INTERSHOP Communications Aktiengesellschaft is 1.07 times less risky than Data Modul. It trades about -0.08 of its potential returns per unit of risk. Data Modul AG is currently generating about -0.08 per unit of risk. If you would invest  187.00  in INTERSHOP Communications Aktiengesellschaft on October 25, 2024 and sell it today you would lose (18.00) from holding INTERSHOP Communications Aktiengesellschaft or give up 9.63% of portfolio value over 90 days.

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

INTERSHOP Communications Aktie  vs.  Data Modul AG

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Very 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 latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Data Modul AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with INTERSHOP Communications and Data Modul

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Data Modul AG 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.