Correlation Between Intel and Teijin

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

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

Diversification Opportunities for Intel and Teijin

0.39

Correlation Coefficient

Intel  Teijin

Weak diversification

The 3 months correlation between Intel and Teijin is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin 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 Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of Intel i.e., Intel and Teijin go up and down completely randomly.

Pair Corralation between Intel and Teijin

Given the investment horizon of 90 days Intel is expected to generate 3.38 times more return on investment than Teijin. However, Intel is 3.38 times more volatile than Teijin. It trades about 0.01 of its potential returns per unit of risk. Teijin is currently generating about -0.05 per unit of risk. If you would invest  2,393  in Intel on December 1, 2024 and sell it today you would lose (20.00) from holding Intel or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.33%
Values	Daily Returns

Intel  vs.  Teijin

Intel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Teijin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teijin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Teijin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intel and Teijin

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

The idea behind Intel and Teijin 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.