Correlation Between Intel and International Digital

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

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

Diversification Opportunities for Intel and International Digital

-0.46

Correlation Coefficient

Intel  International Digital

Very good diversification

The 3 months correlation between Intel and International is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Intel and International Digital Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Digital 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 International Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Digital has no effect on the direction of Intel i.e., Intel and International Digital go up and down completely randomly.

Pair Corralation between Intel and International Digital

Given the investment horizon of 90 days Intel is expected to under-perform the International Digital. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 16.37 times less risky than International Digital. The stock trades about 0.0 of its potential returns per unit of risk. The International Digital Holding is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  12.00  in International Digital Holding on September 16, 2024 and sell it today you would lose (2.20) from holding International Digital Holding or give up 18.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Intel  vs.  International Digital Holding

Intel

Risk-Adjusted Performance

0 of 100

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

International Digital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Digital Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, International Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and International Digital

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

The idea behind Intel and International Digital Holding 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.