Correlation Between Foreign Trade and Intel

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

By analyzing existing cross correlation between Foreign Trade Bank and Intel, you can compare the effects of market volatilities on Foreign Trade 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 Foreign Trade with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Intel.

Diversification Opportunities for Foreign Trade and Intel

0.51

Correlation Coefficient

Foreign Trade  Intel

Very weak diversification

The 3 months correlation between Foreign and Intel is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Bank and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and Foreign Trade 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 Foreign Trade Bank 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 Foreign Trade i.e., Foreign Trade and Intel go up and down completely randomly.

Pair Corralation between Foreign Trade and Intel

Considering the 90-day investment horizon Foreign Trade Bank is expected to generate 0.42 times more return on investment than Intel. However, Foreign Trade Bank is 2.4 times less risky than Intel. It trades about 0.07 of its potential returns per unit of risk. Intel is currently generating about -0.01 per unit of risk. If you would invest  3,880  in Foreign Trade Bank on May 2, 2025 and sell it today you would earn a total of  185.00  from holding Foreign Trade Bank or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Foreign Trade Bank  vs.  Intel

Foreign Trade Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Foreign Trade is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Intel

Risk-Adjusted Performance

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

Pair Trading with Foreign Trade and Intel

The main advantage of trading using opposite Foreign Trade and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Trade 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 Foreign Trade Bank 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.