Correlation Between Semiconductor Manufacturing and INTERSHOP Communications

Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing and INTERSHOP Communications 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 Semiconductor Manufacturing and INTERSHOP Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Semiconductor Manufacturing International and INTERSHOP Communications Aktiengesellschaft, you can compare the effects of market volatilities on Semiconductor Manufacturing and INTERSHOP Communications 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 Semiconductor Manufacturing with a short position of INTERSHOP Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and INTERSHOP Communications.

Diversification Opportunities for Semiconductor Manufacturing and INTERSHOP Communications

0.58

Correlation Coefficient

Semiconductor Manufacturing  INTERSHOP Communications

Very weak diversification

The 3 months correlation between Semiconductor and INTERSHOP is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing In and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and Semiconductor Manufacturing 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 Semiconductor Manufacturing International are associated (or correlated) with INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and INTERSHOP Communications

Assuming the 90 days trading horizon Semiconductor Manufacturing International is expected to generate 2.09 times more return on investment than INTERSHOP Communications. However, Semiconductor Manufacturing is 2.09 times more volatile than INTERSHOP Communications Aktiengesellschaft. It trades about 0.07 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about -0.01 per unit of risk. If you would invest  200.00  in Semiconductor Manufacturing International on October 10, 2024 and sell it today you would earn a total of  140.00  from holding Semiconductor Manufacturing International or generate 70.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Semiconductor Manufacturing In  vs.  INTERSHOP Communications Aktie

Semiconductor Manufacturing

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Semiconductor Manufacturing reported solid returns over the last few months and may actually be approaching a breakup point.

INTERSHOP Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Semiconductor Manufacturing and INTERSHOP Communications

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

The idea behind Semiconductor Manufacturing International and INTERSHOP Communications Aktiengesellschaft 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.