Correlation Between INTEL CDR and Solaris Resources

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

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

Diversification Opportunities for INTEL CDR and Solaris Resources

-0.64

Correlation Coefficient

INTEL CDR  Solaris Resources

Excellent diversification

The 3 months correlation between INTEL and Solaris is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding INTEL CDR and Solaris Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Resources and INTEL CDR 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 CDR are associated (or correlated) with Solaris Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Resources has no effect on the direction of INTEL CDR i.e., INTEL CDR and Solaris Resources go up and down completely randomly.

Pair Corralation between INTEL CDR and Solaris Resources

Assuming the 90 days trading horizon INTEL CDR is expected to under-perform the Solaris Resources. But the stock apears to be less risky and, when comparing its historical volatility, INTEL CDR is 1.51 times less risky than Solaris Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Solaris Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Solaris Resources on October 26, 2024 and sell it today you would earn a total of  168.00  from holding Solaris Resources or generate 53.5% return on investment over 90 days.

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

INTEL CDR  vs.  Solaris Resources

INTEL CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTEL CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INTEL CDR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solaris Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solaris Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Solaris Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTEL CDR and Solaris Resources

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

The idea behind INTEL CDR and Solaris Resources 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.