Correlation Between INTERSHOP Communications and North American

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

Diversification Opportunities for INTERSHOP Communications and North American

0.2

Correlation Coefficient

INTERSHOP Communications  North American

Modest diversification

The 3 months correlation between INTERSHOP and North is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and North American go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and North American

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the North American. But the stock apears to be less risky and, when comparing its historical volatility, INTERSHOP Communications Aktiengesellschaft is 1.02 times less risky than North American. The stock trades about -0.01 of its potential returns per unit of risk. The North American Construction is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,770  in North American Construction on October 5, 2024 and sell it today you would earn a total of  230.00  from holding North American Construction or generate 12.99% 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.  North American Construction

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Modest

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 rather sound basic indicators, INTERSHOP Communications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

North American Const

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, North American reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and North American

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

The idea behind INTERSHOP Communications Aktiengesellschaft and North American Construction 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.