Correlation Between Intershop Holding and Fundamenta Real

Can any of the company-specific risk be diversified away by investing in both Intershop Holding and Fundamenta Real 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 Holding and Fundamenta Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intershop Holding AG and Fundamenta Real Estate, you can compare the effects of market volatilities on Intershop Holding and Fundamenta Real 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 Holding with a short position of Fundamenta Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intershop Holding and Fundamenta Real.

Diversification Opportunities for Intershop Holding and Fundamenta Real

0.67

Correlation Coefficient

Intershop Holding  Fundamenta Real

Poor diversification

The 3 months correlation between Intershop and Fundamenta is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intershop Holding AG and Fundamenta Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamenta Real Estate and Intershop Holding 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 Holding AG are associated (or correlated) with Fundamenta Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamenta Real Estate has no effect on the direction of Intershop Holding i.e., Intershop Holding and Fundamenta Real go up and down completely randomly.

Pair Corralation between Intershop Holding and Fundamenta Real

Assuming the 90 days trading horizon Intershop Holding AG is expected to generate 0.83 times more return on investment than Fundamenta Real. However, Intershop Holding AG is 1.21 times less risky than Fundamenta Real. It trades about 0.04 of its potential returns per unit of risk. Fundamenta Real Estate is currently generating about 0.03 per unit of risk. If you would invest  11,037  in Intershop Holding AG on October 10, 2024 and sell it today you would earn a total of  1,763  from holding Intershop Holding AG or generate 15.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Intershop Holding AG  vs.  Fundamenta Real Estate

Intershop Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intershop Holding AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Intershop Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fundamenta Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamenta Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fundamenta Real is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Intershop Holding and Fundamenta Real

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

The idea behind Intershop Holding AG and Fundamenta Real Estate 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.