Correlation Between INTERSHOP Communications and Continental Aktiengesellscha

Can any of the company-specific risk be diversified away by investing in both INTERSHOP Communications and Continental Aktiengesellscha 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 Continental Aktiengesellscha 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 Continental Aktiengesellschaft, you can compare the effects of market volatilities on INTERSHOP Communications and Continental Aktiengesellscha 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 Continental Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and Continental Aktiengesellscha.

Diversification Opportunities for INTERSHOP Communications and Continental Aktiengesellscha

0.21

Correlation Coefficient

INTERSHOP Communications  Continental Aktiengesellscha

Modest diversification

The 3 months correlation between INTERSHOP and Continental is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha 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 Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and Continental Aktiengesellscha

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to under-perform the Continental Aktiengesellscha. In addition to that, INTERSHOP Communications is 1.15 times more volatile than Continental Aktiengesellschaft. It trades about -0.02 of its total potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about -0.01 per unit of volatility. If you would invest  7,430  in Continental Aktiengesellschaft on September 24, 2024 and sell it today you would lose (930.00) from holding Continental Aktiengesellschaft or give up 12.52% of portfolio value over 90 days.

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

INTERSHOP Communications Aktie  vs.  Continental Aktiengesellschaft

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Continental Aktiengesellscha

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Continental Aktiengesellscha reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and Continental Aktiengesellscha

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

The idea behind INTERSHOP Communications Aktiengesellschaft and Continental 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..