Correlation Between INTERSHOP Communications and Geely Automobile

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

Diversification Opportunities for INTERSHOP Communications and Geely Automobile

0.8

Correlation Coefficient

INTERSHOP Communications  Geely Automobile

Very poor diversification

The 3 months correlation between INTERSHOP and Geely is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Geely Automobile go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Geely Automobile

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 1.23 times less return on investment than Geely Automobile. In addition to that, INTERSHOP Communications is 1.06 times more volatile than Geely Automobile Holdings. It trades about 0.07 of its total potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.09 per unit of volatility. If you would invest  187.00  in Geely Automobile Holdings on December 22, 2024 and sell it today you would earn a total of  28.00  from holding Geely Automobile Holdings or generate 14.97% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Geely Automobile Holdings

INTERSHOP Communications

Risk-Adjusted Performance

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 fragile basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Geely Automobile Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Geely Automobile Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Geely Automobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and Geely Automobile

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Geely Automobile Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.