Correlation Between Intel and East Africa

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

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

Diversification Opportunities for Intel and East Africa

-0.67

Correlation Coefficient

Intel  East Africa

Excellent diversification

The 3 months correlation between Intel and East is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intel and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals 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 East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Intel i.e., Intel and East Africa go up and down completely randomly.

Pair Corralation between Intel and East Africa

Given the investment horizon of 90 days Intel is expected to under-perform the East Africa. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 4.89 times less risky than East Africa. The stock trades about -0.03 of its potential returns per unit of risk. The East Africa Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.26  in East Africa Metals on September 3, 2024 and sell it today you would earn a total of  4.74  from holding East Africa Metals or generate 75.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Intel  vs.  East Africa Metals

Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

East Africa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Africa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Intel and East Africa

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

The idea behind Intel and East Africa Metals 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.