Correlation Between Intel and Stora Enso

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

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

Diversification Opportunities for Intel and Stora Enso

-0.38

Correlation Coefficient

Intel  Stora Enso

Very good diversification

The 3 months correlation between Intel and Stora is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Intel i.e., Intel and Stora Enso go up and down completely randomly.

Pair Corralation between Intel and Stora Enso

Assuming the 90 days trading horizon Intel is expected to under-perform the Stora Enso. In addition to that, Intel is 1.71 times more volatile than Stora Enso Oyj. It trades about -0.04 of its total potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.01 per unit of volatility. If you would invest  1,084  in Stora Enso Oyj on September 19, 2024 and sell it today you would lose (121.00) from holding Stora Enso Oyj or give up 11.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.66%
Values	Daily Returns

Intel  vs.  Stora Enso Oyj

Intel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Stora Enso Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stora Enso Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Intel and Stora Enso

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

The idea behind Intel and Stora Enso Oyj 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.