Correlation Between INTERSHOP Communications and KGHM Polska

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

Diversification Opportunities for INTERSHOP Communications and KGHM Polska

-0.48

Correlation Coefficient

INTERSHOP Communications  KGHM Polska

Very good diversification

The 3 months correlation between INTERSHOP and KGHM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz 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 KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and KGHM Polska go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and KGHM Polska

Assuming the 90 days trading horizon INTERSHOP Communications Aktiengesellschaft is expected to generate 0.93 times more return on investment than KGHM Polska. However, INTERSHOP Communications Aktiengesellschaft is 1.08 times less risky than KGHM Polska. It trades about 0.07 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about -0.14 per unit of risk. If you would invest  158.00  in INTERSHOP Communications Aktiengesellschaft on September 25, 2024 and sell it today you would earn a total of  16.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 10.13% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  KGHM Polska Miedz

INTERSHOP Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 5 (%) 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 January 2025.

KGHM Polska Miedz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KGHM Polska Miedz has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INTERSHOP Communications and KGHM Polska

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

The idea behind INTERSHOP Communications Aktiengesellschaft and KGHM Polska Miedz 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.