Correlation Between INTERSHOP Communications and Power Integrations

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

Diversification Opportunities for INTERSHOP Communications and Power Integrations

-0.07

Correlation Coefficient

INTERSHOP Communications  Power Integrations

Good diversification

The 3 months correlation between INTERSHOP and Power is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Power Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Integrations 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 Power Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Integrations has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Power Integrations go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Power Integrations

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 1.8 times more return on investment than Power Integrations. However, INTERSHOP Communications is 1.8 times more volatile than Power Integrations. It trades about 0.06 of its potential returns per unit of risk. Power Integrations is currently generating about -0.13 per unit of risk. If you would invest  175.00  in INTERSHOP Communications Aktiengesellschaft on December 25, 2024 and sell it today you would earn a total of  18.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 10.29% 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.  Power Integrations

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.

Power Integrations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Integrations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with INTERSHOP Communications and Power Integrations

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Power Integrations 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.