Correlation Between INTERSHOP Communications and S A P

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

Diversification Opportunities for INTERSHOP Communications and S A P

0.33

Correlation Coefficient

INTERSHOP Communications  S A P

Weak diversification

The 3 months correlation between INTERSHOP and SAP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and S A P go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and S A P

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 2.07 times less return on investment than S A P. In addition to that, INTERSHOP Communications is 2.74 times more volatile than SAP SE. It trades about 0.06 of its total potential returns per unit of risk. SAP SE is currently generating about 0.31 per unit of volatility. If you would invest  22,115  in SAP SE on November 28, 2024 and sell it today you would earn a total of  5,125  from holding SAP SE or generate 23.17% 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.  SAP SE

INTERSHOP Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in March 2025.

SAP SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, S A P unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and S A P

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

The idea behind INTERSHOP Communications Aktiengesellschaft and SAP SE 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.