Correlation Between INTERSHOP Communications and RYANAIR HLDGS

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

Diversification Opportunities for INTERSHOP Communications and RYANAIR HLDGS

-0.11

Correlation Coefficient

INTERSHOP Communications  RYANAIR HLDGS

Good diversification

The 3 months correlation between INTERSHOP and RYANAIR is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and RYANAIR HLDGS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYANAIR HLDGS ADR 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 RYANAIR HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYANAIR HLDGS ADR has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and RYANAIR HLDGS go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and RYANAIR HLDGS

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the RYANAIR HLDGS. In addition to that, INTERSHOP Communications is 1.3 times more volatile than RYANAIR HLDGS ADR. It trades about -0.08 of its total potential returns per unit of risk. RYANAIR HLDGS ADR is currently generating about 0.03 per unit of volatility. If you would invest  4,013  in RYANAIR HLDGS ADR on October 25, 2024 and sell it today you would earn a total of  67.00  from holding RYANAIR HLDGS ADR or generate 1.67% 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.  RYANAIR HLDGS ADR

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 fragile 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.

RYANAIR HLDGS ADR

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RYANAIR HLDGS ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RYANAIR HLDGS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTERSHOP Communications and RYANAIR HLDGS

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

The idea behind INTERSHOP Communications Aktiengesellschaft and RYANAIR HLDGS ADR 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.