Correlation Between BrainChip Holdings and Intel

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

By analyzing existing cross correlation between BrainChip Holdings and Intel, you can compare the effects of market volatilities on BrainChip Holdings 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 BrainChip Holdings with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrainChip Holdings and Intel.

Diversification Opportunities for BrainChip Holdings and Intel

0.33

Correlation Coefficient

BrainChip Holdings  Intel

Weak diversification

The 3 months correlation between BrainChip and Intel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BrainChip Holdings and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and BrainChip Holdings 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 BrainChip Holdings 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 BrainChip Holdings i.e., BrainChip Holdings and Intel go up and down completely randomly.

Pair Corralation between BrainChip Holdings and Intel

Assuming the 90 days horizon BrainChip Holdings is expected to generate 2.94 times more return on investment than Intel. However, BrainChip Holdings is 2.94 times more volatile than Intel. It trades about 0.03 of its potential returns per unit of risk. Intel is currently generating about -0.37 per unit of risk. If you would invest  17.00  in BrainChip Holdings on September 19, 2024 and sell it today you would earn a total of  0.00  from holding BrainChip Holdings or generate 0.0% return on investment over 90 days.

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

BrainChip Holdings  vs.  Intel

BrainChip Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BrainChip Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, BrainChip Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BrainChip Holdings and Intel

The main advantage of trading using opposite BrainChip Holdings and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrainChip Holdings 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 BrainChip Holdings 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.