Correlation Between INTERSHOP Communications and TRAVEL +

Can any of the company-specific risk be diversified away by investing in both INTERSHOP Communications and TRAVEL + 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 TRAVEL + 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on INTERSHOP Communications and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERSHOP Communications and TRAVEL +.

Diversification Opportunities for INTERSHOP Communications and TRAVEL +

0.79

Correlation Coefficient

INTERSHOP Communications  TRAVEL +

Poor diversification

The 3 months correlation between INTERSHOP and TRAVEL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding INTERSHOP Communications Aktie and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of INTERSHOP Communications i.e., INTERSHOP Communications and TRAVEL + go up and down completely randomly.

Pair Corralation between INTERSHOP Communications and TRAVEL +

Assuming the 90 days trading horizon INTERSHOP Communications is expected to generate 5.63 times less return on investment than TRAVEL +. In addition to that, INTERSHOP Communications is 1.54 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.03 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.28 per unit of volatility. If you would invest  3,927  in TRAVEL LEISURE DL 01 on September 3, 2024 and sell it today you would earn a total of  1,323  from holding TRAVEL LEISURE DL 01 or generate 33.69% return on investment over 90 days.

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

INTERSHOP Communications Aktie  vs.  TRAVEL LEISURE DL 01

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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERSHOP Communications and TRAVEL +

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

The idea behind INTERSHOP Communications Aktiengesellschaft and TRAVEL LEISURE DL 01 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.