Correlation Between Intel and Expat Czech

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

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

Diversification Opportunities for Intel and Expat Czech

0.64

Correlation Coefficient

Intel  Expat Czech

Poor diversification

The 3 months correlation between Intel and Expat is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Expat Czech PX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Czech PX and Intel 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 Intel are associated (or correlated) with Expat Czech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Czech PX has no effect on the direction of Intel i.e., Intel and Expat Czech go up and down completely randomly.

Pair Corralation between Intel and Expat Czech

Assuming the 90 days trading horizon Intel is expected to generate 5.19 times more return on investment than Expat Czech. However, Intel is 5.19 times more volatile than Expat Czech PX. It trades about 0.1 of its potential returns per unit of risk. Expat Czech PX is currently generating about 0.11 per unit of risk. If you would invest  1,929  in Intel on August 19, 2024 and sell it today you would earn a total of  378.00  from holding Intel or generate 19.6% return on investment over 90 days.

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

Intel  vs.  Expat Czech PX

Intel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Intel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Expat Czech PX

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Expat Czech PX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Expat Czech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intel and Expat Czech

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

The idea behind Intel and Expat Czech PX 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.

Check out your portfolio center.

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.