Correlation Between Intchains Group and Renesas Electronics

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

By analyzing existing cross correlation between Intchains Group Limited and Renesas Electronics Corp, you can compare the effects of market volatilities on Intchains Group and Renesas Electronics 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 Intchains Group with a short position of Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intchains Group and Renesas Electronics.

Diversification Opportunities for Intchains Group and Renesas Electronics

-0.26

Correlation Coefficient

Intchains Group  Renesas Electronics

Very good diversification

The 3 months correlation between Intchains and Renesas is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Intchains Group Limited and Renesas Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics Corp and Intchains Group 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 Intchains Group Limited are associated (or correlated) with Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics Corp has no effect on the direction of Intchains Group i.e., Intchains Group and Renesas Electronics go up and down completely randomly.

Pair Corralation between Intchains Group and Renesas Electronics

Considering the 90-day investment horizon Intchains Group Limited is expected to generate 18.27 times more return on investment than Renesas Electronics. However, Intchains Group is 18.27 times more volatile than Renesas Electronics Corp. It trades about 0.1 of its potential returns per unit of risk. Renesas Electronics Corp is currently generating about 0.0 per unit of risk. If you would invest  497.00  in Intchains Group Limited on October 11, 2024 and sell it today you would lose (75.00) from holding Intchains Group Limited or give up 15.09% of portfolio value over 90 days.

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

Intchains Group Limited  vs.  Renesas Electronics Corp

Intchains Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intchains Group Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Intchains Group reported solid returns over the last few months and may actually be approaching a breakup point.

Renesas Electronics Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renesas Electronics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Renesas Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intchains Group and Renesas Electronics

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

The idea behind Intchains Group Limited and Renesas Electronics Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.