Correlation Between INTERSHOP Communications and Adtalem Global

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

Diversification Opportunities for INTERSHOP Communications and Adtalem Global

0.21

Correlation Coefficient

INTERSHOP Communications  Adtalem Global

Modest diversification

The 3 months correlation between INTERSHOP and Adtalem is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Adtalem Global Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adtalem Global Education 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 Adtalem Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adtalem Global Education has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Adtalem Global go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Adtalem Global

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the Adtalem Global. In addition to that, INTERSHOP Communications is 1.16 times more volatile than Adtalem Global Education. It trades about -0.02 of its total potential returns per unit of risk. Adtalem Global Education is currently generating about 0.09 per unit of volatility. If you would invest  3,340  in Adtalem Global Education on October 10, 2024 and sell it today you would earn a total of  5,710  from holding Adtalem Global Education or generate 170.96% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Adtalem Global Education

INTERSHOP Communications

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Adtalem Global Education

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Adtalem Global unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and Adtalem Global

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Adtalem Global Education 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.