Correlation Between Intel and Applied Opt

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

By analyzing existing cross correlation between Intel and Applied Opt, you can compare the effects of market volatilities on Intel and Applied Opt 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 Applied Opt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Applied Opt.

Diversification Opportunities for Intel and Applied Opt

0.64

Correlation Coefficient

Intel  Applied Opt

Poor diversification

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

Pair Corralation between Intel and Applied Opt

Given the investment horizon of 90 days Intel is expected to under-perform the Applied Opt. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 2.07 times less risky than Applied Opt. The stock trades about -0.01 of its potential returns per unit of risk. The Applied Opt is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,911  in Applied Opt on May 14, 2025 and sell it today you would earn a total of  175.00  from holding Applied Opt or generate 9.16% return on investment over 90 days.

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

Intel  vs.  Applied Opt

Intel

Risk-Adjusted Performance

Weakest

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

Applied Opt

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Opt are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Applied Opt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Applied Opt

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

The idea behind Intel and Applied Opt 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..