Correlation Between INTERSHOP Communications and Toshiba Tec

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

Diversification Opportunities for INTERSHOP Communications and Toshiba Tec

-0.54

Correlation Coefficient

INTERSHOP Communications  Toshiba Tec

Excellent diversification

The 3 months correlation between INTERSHOP and Toshiba is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Toshiba Tec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toshiba Tec 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 Toshiba Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toshiba Tec has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Toshiba Tec go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Toshiba Tec

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 1.57 times more return on investment than Toshiba Tec. However, INTERSHOP Communications is 1.57 times more volatile than Toshiba Tec. It trades about 0.06 of its potential returns per unit of risk. Toshiba Tec is currently generating about -0.12 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

INTERSHOP Communications Aktie  vs.  Toshiba Tec

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 weak basic indicators, INTERSHOP Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Toshiba Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toshiba Tec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INTERSHOP Communications and Toshiba Tec

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Toshiba Tec 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.