Correlation Between Intel and Shionogi

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

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

Diversification Opportunities for Intel and Shionogi

-0.5

Correlation Coefficient

Intel  Shionogi

Very good diversification

The 3 months correlation between Intel and Shionogi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi 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 Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of Intel i.e., Intel and Shionogi go up and down completely randomly.

Pair Corralation between Intel and Shionogi

Assuming the 90 days trading horizon Intel is expected to generate 1.7 times more return on investment than Shionogi. However, Intel is 1.7 times more volatile than Shionogi Co. It trades about 0.19 of its potential returns per unit of risk. Shionogi Co is currently generating about 0.11 per unit of risk. If you would invest  1,890  in Intel on October 20, 2024 and sell it today you would earn a total of  180.00  from holding Intel or generate 9.52% return on investment over 90 days.

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

Intel  vs.  Shionogi Co

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 comparatively stable essential indicators, Intel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Shionogi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Shionogi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Intel and Shionogi

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

The idea behind Intel and Shionogi Co 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.