Correlation Between INTERSHOP Communications and Chiba Bank

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

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

Diversification Opportunities for INTERSHOP Communications and Chiba Bank

0.23

Correlation Coefficient

INTERSHOP Communications  Chiba Bank

Modest diversification

The 3 months correlation between INTERSHOP and Chiba is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Chiba Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank and INTERSHOP Communications 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 Communications Aktiengesellschaft are associated (or correlated) with Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Chiba Bank go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Chiba Bank

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 1.26 times less return on investment than Chiba Bank. In addition to that, INTERSHOP Communications is 1.19 times more volatile than Chiba Bank. It trades about 0.03 of its total potential returns per unit of risk. Chiba Bank is currently generating about 0.05 per unit of volatility. If you would invest  740.00  in Chiba Bank on September 2, 2024 and sell it today you would earn a total of  40.00  from holding Chiba Bank or generate 5.41% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  Chiba Bank

INTERSHOP Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Chiba Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chiba Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chiba Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with INTERSHOP Communications and Chiba Bank

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Chiba Bank 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.