Correlation Between Intel and Sony

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

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

Diversification Opportunities for Intel and Sony

0.26

Correlation Coefficient

Intel  Sony

Modest diversification

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

Pair Corralation between Intel and Sony

Assuming the 90 days trading horizon Intel is expected to generate 1.72 times more return on investment than Sony. However, Intel is 1.72 times more volatile than Sony Group. It trades about 0.06 of its potential returns per unit of risk. Sony Group is currently generating about 0.06 per unit of risk. If you would invest  44,300  in Intel on September 2, 2024 and sell it today you would earn a total of  4,250  from holding Intel or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Intel  vs.  Sony Group

Intel

Risk-Adjusted Performance

4 of 100

Insignificant

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

Sony Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Sony may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intel and Sony

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

The idea behind Intel and Sony Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.