Correlation Between VIVA WINE and INTERSHOP Communications

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

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

Diversification Opportunities for VIVA WINE and INTERSHOP Communications

-0.74

Correlation Coefficient

VIVA WINE  INTERSHOP Communications

Pay attention - limited upside

The 3 months correlation between VIVA and INTERSHOP is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of VIVA WINE i.e., VIVA WINE and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between VIVA WINE and INTERSHOP Communications

Assuming the 90 days horizon VIVA WINE GROUP is expected to under-perform the INTERSHOP Communications. But the stock apears to be less risky and, when comparing its historical volatility, VIVA WINE GROUP is 1.62 times less risky than INTERSHOP Communications. The stock trades about -0.15 of its potential returns per unit of risk. The INTERSHOP Communications Aktiengesellschaft is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  168.00  in INTERSHOP Communications Aktiengesellschaft on September 16, 2024 and sell it today you would earn a total of  3.00  from holding INTERSHOP Communications Aktiengesellschaft or generate 1.79% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  INTERSHOP Communications Aktie

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic 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.

INTERSHOP Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 1 (%) 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.

Pair Trading with VIVA WINE and INTERSHOP Communications

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

The idea behind VIVA WINE GROUP and INTERSHOP Communications 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.