Correlation Between APA and Intel

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Can any of the company-specific risk be diversified away by investing in both APA and Intel 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 APA and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Intel, you can compare the effects of market volatilities on APA and Intel 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 APA with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Intel.

Diversification Opportunities for APA and Intel

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between APA and Intel is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and APA 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 APA Corporation are associated (or correlated) with Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of APA i.e., APA and Intel go up and down completely randomly.

Pair Corralation between APA and Intel

Assuming the 90 days trading horizon APA Corporation is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, APA Corporation is 1.32 times less risky than Intel. The stock trades about -0.03 of its potential returns per unit of risk. The Intel is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  46,145  in Intel on August 30, 2024 and sell it today you would earn a total of  2,555  from holding Intel or generate 5.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

APA Corp.  vs.  Intel

 Performance 
       Timeline  
APA Corporation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days APA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Intel 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intel showed solid returns over the last few months and may actually be approaching a breakup point.

APA and Intel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with APA and Intel

The main advantage of trading using opposite APA and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.
The idea behind APA Corporation and Intel 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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