Correlation Between Intershop Holding and Swiss Prime

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

Diversification Opportunities for Intershop Holding and Swiss Prime

0.89

Correlation Coefficient

Intershop Holding  Swiss Prime

Very poor diversification

The 3 months correlation between Intershop and Swiss is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Intershop Holding AG and Swiss Prime Site in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Prime Site 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 Swiss Prime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Prime Site has no effect on the direction of Intershop Holding i.e., Intershop Holding and Swiss Prime go up and down completely randomly.

Pair Corralation between Intershop Holding and Swiss Prime

Assuming the 90 days trading horizon Intershop Holding is expected to generate 1.06 times less return on investment than Swiss Prime. But when comparing it to its historical volatility, Intershop Holding AG is 1.12 times less risky than Swiss Prime. It trades about 0.14 of its potential returns per unit of risk. Swiss Prime Site is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,385  in Swiss Prime Site on October 9, 2024 and sell it today you would earn a total of  525.00  from holding Swiss Prime Site or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Intershop Holding AG  vs.  Swiss Prime Site

Intershop Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intershop Holding AG are ranked lower than 11 (%) 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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Swiss Prime Site

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Intershop Holding and Swiss Prime

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

The idea behind Intershop Holding AG and Swiss Prime Site 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.