Correlation Between INTERSHOP Communications and Mitsubishi UFJ

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

Diversification Opportunities for INTERSHOP Communications and Mitsubishi UFJ

0.61

Correlation Coefficient

INTERSHOP Communications  Mitsubishi UFJ

Poor diversification

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

Pair Corralation between INTERSHOP Communications and Mitsubishi UFJ

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 1.97 times more return on investment than Mitsubishi UFJ. However, INTERSHOP Communications is 1.97 times more volatile than Mitsubishi UFJ Financial. It trades about 0.07 of its potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.07 per unit of risk. If you would invest  180.00  in INTERSHOP Communications Aktiengesellschaft on December 2, 2024 and sell it today you would earn a total of  20.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 11.11% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Mitsubishi UFJ Financial

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

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mitsubishi UFJ may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with INTERSHOP Communications and Mitsubishi UFJ

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Mitsubishi UFJ Financial 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.