Correlation Between INTERSHOP Communications and Singapore Reinsurance

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

Diversification Opportunities for INTERSHOP Communications and Singapore Reinsurance

0.76

Correlation Coefficient

INTERSHOP Communications  Singapore Reinsurance

Poor diversification

The 3 months correlation between INTERSHOP and Singapore is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Singapore Reinsurance go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Singapore Reinsurance

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the Singapore Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, INTERSHOP Communications Aktiengesellschaft is 1.09 times less risky than Singapore Reinsurance. The stock trades about -0.05 of its potential returns per unit of risk. The Singapore Reinsurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,460  in Singapore Reinsurance on September 15, 2024 and sell it today you would earn a total of  960.00  from holding Singapore Reinsurance or generate 39.02% 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.  Singapore Reinsurance

INTERSHOP Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Singapore Reinsurance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Singapore Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and Singapore Reinsurance

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Singapore Reinsurance 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.