Correlation Between Intel and Living Cell

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

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

Diversification Opportunities for Intel and Living Cell

0.35

Correlation Coefficient

Intel  Living Cell

Weak diversification

The 3 months correlation between Intel and Living is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell Technologies 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 Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of Intel i.e., Intel and Living Cell go up and down completely randomly.

Pair Corralation between Intel and Living Cell

Given the investment horizon of 90 days Intel is expected to generate 23.24 times less return on investment than Living Cell. But when comparing it to its historical volatility, Intel is 10.84 times less risky than Living Cell. It trades about 0.07 of its potential returns per unit of risk. Living Cell Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.16  in Living Cell Technologies on December 28, 2024 and sell it today you would earn a total of  0.24  from holding Living Cell Technologies or generate 150.0% 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.  Living Cell Technologies

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Intel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Living Cell Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Living Cell Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Living Cell reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Living Cell

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

The idea behind Intel and Living Cell Technologies 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.