Correlation Between Stellar and INTEL

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

By analyzing existing cross correlation between Stellar and INTEL PORATION, you can compare the effects of market volatilities on Stellar and INTEL 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 Stellar with a short position of INTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and INTEL.

Diversification Opportunities for Stellar and INTEL

-0.43

Correlation Coefficient

Stellar  INTEL

Very good diversification

The 3 months correlation between Stellar and INTEL is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and INTEL PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL PORATION and Stellar 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 Stellar are associated (or correlated) with INTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL PORATION has no effect on the direction of Stellar i.e., Stellar and INTEL go up and down completely randomly.

Pair Corralation between Stellar and INTEL

Assuming the 90 days trading horizon Stellar is expected to generate 8.01 times less return on investment than INTEL. In addition to that, Stellar is 1.91 times more volatile than INTEL PORATION. It trades about 0.01 of its total potential returns per unit of risk. INTEL PORATION is currently generating about 0.12 per unit of volatility. If you would invest  8,175  in INTEL PORATION on October 10, 2024 and sell it today you would earn a total of  779.00  from holding INTEL PORATION or generate 9.53% return on investment over 90 days.

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

Stellar  vs.  INTEL PORATION

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

INTEL PORATION

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTEL PORATION are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, INTEL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Stellar and INTEL

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

The idea behind Stellar and INTEL PORATION 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.