Correlation Between Swiss Prime and Intershop Holding

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

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

Diversification Opportunities for Swiss Prime and Intershop Holding

0.76

Correlation Coefficient

Swiss Prime  Intershop Holding

Poor diversification

The 3 months correlation between Swiss and Intershop is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Prime Site and Intershop Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intershop Holding and Swiss Prime 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 Swiss Prime Site are associated (or correlated) with Intershop Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intershop Holding has no effect on the direction of Swiss Prime i.e., Swiss Prime and Intershop Holding go up and down completely randomly.

Pair Corralation between Swiss Prime and Intershop Holding

Assuming the 90 days trading horizon Swiss Prime is expected to generate 4.45 times less return on investment than Intershop Holding. In addition to that, Swiss Prime is 1.02 times more volatile than Intershop Holding AG. It trades about 0.02 of its total potential returns per unit of risk. Intershop Holding AG is currently generating about 0.09 per unit of volatility. If you would invest  12,260  in Intershop Holding AG on September 16, 2024 and sell it today you would earn a total of  460.00  from holding Intershop Holding AG or generate 3.75% return on investment over 90 days.

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

Swiss Prime Site  vs.  Intershop Holding AG

Swiss Prime Site

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Prime Site are ranked lower than 1 (%) 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Intershop Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intershop Holding AG are ranked lower than 7 (%) 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.

Pair Trading with Swiss Prime and Intershop Holding

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

The idea behind Swiss Prime Site and Intershop Holding AG 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 Transaction History module to view history of all your transactions and understand their impact on performance.