Correlation Between Valeo SA and Intel

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Can any of the company-specific risk be diversified away by investing in both Valeo SA and Intel 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 Valeo SA and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeo SA and Intel, you can compare the effects of market volatilities on Valeo SA and Intel 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 Valeo SA with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeo SA and Intel.

Diversification Opportunities for Valeo SA and Intel

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Valeo and Intel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Valeo SA and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Valeo SA 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 Valeo SA are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Valeo SA i.e., Valeo SA and Intel go up and down completely randomly.

Pair Corralation between Valeo SA and Intel

Assuming the 90 days horizon Valeo SA is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, Valeo SA is 1.01 times less risky than Intel. The stock trades about -0.06 of its potential returns per unit of risk. The Intel is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,264  in Intel on December 30, 2023 and sell it today you would earn a total of  1,153  from holding Intel or generate 35.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.41%
ValuesDaily Returns

Valeo SA  vs.  Intel

 Performance 
       Timeline  
Valeo SA 

Risk-Adjusted Performance

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Over the last 90 days Valeo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Intel 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Valeo SA and Intel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Valeo SA and Intel

The main advantage of trading using opposite Valeo SA and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeo SA position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.
The idea behind Valeo SA and Intel 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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