Correlation Between Intel and Tomra Systems

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

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

Diversification Opportunities for Intel and Tomra Systems

0.68

Correlation Coefficient

Intel  Tomra Systems

Poor diversification

The 3 months correlation between Intel and Tomra is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA 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 Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Intel i.e., Intel and Tomra Systems go up and down completely randomly.

Pair Corralation between Intel and Tomra Systems

Given the investment horizon of 90 days Intel is expected to generate 1.53 times more return on investment than Tomra Systems. However, Intel is 1.53 times more volatile than Tomra Systems ASA. It trades about 0.08 of its potential returns per unit of risk. Tomra Systems ASA is currently generating about 0.1 per unit of risk. If you would invest  2,030  in Intel on December 27, 2024 and sell it today you would earn a total of  332.00  from holding Intel or generate 16.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Intel  vs.  Tomra Systems ASA

Intel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 6 (%) 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.

Tomra Systems ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tomra Systems ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Tomra Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Tomra Systems

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

The idea behind Intel and Tomra Systems ASA 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.

Check out your portfolio center.

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.