Correlation Between Renesas Electronics and Intchains Group

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

By analyzing existing cross correlation between Renesas Electronics Corp and Intchains Group Limited, you can compare the effects of market volatilities on Renesas Electronics and Intchains Group 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 Renesas Electronics with a short position of Intchains Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renesas Electronics and Intchains Group.

Diversification Opportunities for Renesas Electronics and Intchains Group

-0.41

Correlation Coefficient

Renesas Electronics  Intchains Group

Very good diversification

The 3 months correlation between Renesas and Intchains is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Renesas Electronics Corp and Intchains Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intchains Group and Renesas Electronics 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 Renesas Electronics Corp are associated (or correlated) with Intchains Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intchains Group has no effect on the direction of Renesas Electronics i.e., Renesas Electronics and Intchains Group go up and down completely randomly.

Pair Corralation between Renesas Electronics and Intchains Group

Assuming the 90 days horizon Renesas Electronics Corp is expected to generate 0.22 times more return on investment than Intchains Group. However, Renesas Electronics Corp is 4.48 times less risky than Intchains Group. It trades about 0.11 of its potential returns per unit of risk. Intchains Group Limited is currently generating about 0.0 per unit of risk. If you would invest  648.00  in Renesas Electronics Corp on December 23, 2024 and sell it today you would earn a total of  121.00  from holding Renesas Electronics Corp or generate 18.67% return on investment over 90 days.

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

Renesas Electronics Corp  vs.  Intchains Group Limited

Renesas Electronics Corp

Risk-Adjusted Performance

OK

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

Intchains Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intchains Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Intchains Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Renesas Electronics and Intchains Group

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

The idea behind Renesas Electronics Corp and Intchains Group Limited 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.