Correlation Between Intel and Optical Cable

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

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

Diversification Opportunities for Intel and Optical Cable

0.58

Correlation Coefficient

Intel  Optical Cable

Very weak diversification

The 3 months correlation between Intel and Optical is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Optical Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optical Cable 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 Optical Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optical Cable has no effect on the direction of Intel i.e., Intel and Optical Cable go up and down completely randomly.

Pair Corralation between Intel and Optical Cable

Given the investment horizon of 90 days Intel is expected to under-perform the Optical Cable. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 2.43 times less risky than Optical Cable. The stock trades about -0.01 of its potential returns per unit of risk. The Optical Cable is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Optical Cable on May 3, 2025 and sell it today you would earn a total of  164.00  from holding Optical Cable or generate 52.9% return on investment over 90 days.

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

Intel  vs.  Optical Cable

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.

Optical Cable

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Optical Cable are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Optical Cable exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Optical Cable

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

The idea behind Intel and Optical Cable 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.