Correlation Between Sempra and INTERSHOP Communications

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

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

Diversification Opportunities for Sempra and INTERSHOP Communications

0.19

Correlation Coefficient

Sempra  INTERSHOP Communications

Average diversification

The 3 months correlation between Sempra and INTERSHOP is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sempra and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and Sempra 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 Sempra 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 Sempra i.e., Sempra and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Sempra and INTERSHOP Communications

Assuming the 90 days horizon Sempra is expected to generate 0.62 times more return on investment than INTERSHOP Communications. However, Sempra is 1.62 times less risky than INTERSHOP Communications. It trades about 0.09 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  6,281  in Sempra on October 23, 2024 and sell it today you would earn a total of  2,025  from holding Sempra or generate 32.24% return on investment over 90 days.

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

Sempra  vs.  INTERSHOP Communications Aktie

Sempra

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sempra are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sempra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

INTERSHOP Communications

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days INTERSHOP Communications Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, INTERSHOP Communications is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sempra and INTERSHOP Communications

The main advantage of trading using opposite Sempra and INTERSHOP Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sempra 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 Sempra 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.