Correlation Between Intel and Demant AS

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

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

Diversification Opportunities for Intel and Demant AS

-0.84

Correlation Coefficient

Intel  Demant AS

Pay attention - limited upside

The 3 months correlation between Intel and Demant is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Demant AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Demant AS ADR 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 Demant AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Demant AS ADR has no effect on the direction of Intel i.e., Intel and Demant AS go up and down completely randomly.

Pair Corralation between Intel and Demant AS

Given the investment horizon of 90 days Intel is expected to under-perform the Demant AS. In addition to that, Intel is 1.49 times more volatile than Demant AS ADR. It trades about -0.07 of its total potential returns per unit of risk. Demant AS ADR is currently generating about 0.0 per unit of volatility. If you would invest  2,050  in Demant AS ADR on September 4, 2024 and sell it today you would lose (113.00) from holding Demant AS ADR or give up 5.51% of portfolio value over 90 days.

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

Intel  vs.  Demant AS ADR

Intel

Risk-Adjusted Performance

7 of 100

OK

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

Demant AS ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Demant AS ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Intel and Demant AS

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

The idea behind Intel and Demant AS ADR 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.