Correlation Between INTERSHOP Communications and INTERNET INJPADR

Can any of the company-specific risk be diversified away by investing in both INTERSHOP Communications and INTERNET INJPADR 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 INTERNET INJPADR 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 INTERNET INJPADR 1, you can compare the effects of market volatilities on INTERSHOP Communications and INTERNET INJPADR 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 INTERNET INJPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and INTERNET INJPADR.

Diversification Opportunities for INTERSHOP Communications and INTERNET INJPADR

-0.13

Correlation Coefficient

INTERSHOP Communications  INTERNET INJPADR

Good diversification

The 3 months correlation between INTERSHOP and INTERNET is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and INTERNET INJPADR 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNET INJPADR 1 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 INTERNET INJPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNET INJPADR 1 has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and INTERNET INJPADR go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and INTERNET INJPADR

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the INTERNET INJPADR. But the stock apears to be less risky and, when comparing its historical volatility, INTERSHOP Communications Aktiengesellschaft is 1.4 times less risky than INTERNET INJPADR. The stock trades about -0.07 of its potential returns per unit of risk. The INTERNET INJPADR 1 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,220  in INTERNET INJPADR 1 on October 26, 2024 and sell it today you would earn a total of  80.00  from holding INTERNET INJPADR 1 or generate 2.48% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  INTERNET INJPADR 1

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 uncertain 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.

INTERNET INJPADR 1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNET INJPADR 1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTERNET INJPADR 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 INTERNET INJPADR

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

The idea behind INTERSHOP Communications Aktiengesellschaft and INTERNET INJPADR 1 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.