Correlation Between OPC Energy and Intel

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Can any of the company-specific risk be diversified away by investing in both OPC Energy 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 OPC Energy and Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPC Energy and Intel, you can compare the effects of market volatilities on OPC Energy 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 OPC Energy with a short position of Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPC Energy and Intel.

Diversification Opportunities for OPC Energy and Intel

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between OPC and Intel is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding OPC Energy and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and OPC Energy 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 OPC Energy 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 has no effect on the direction of OPC Energy i.e., OPC Energy and Intel go up and down completely randomly.

Pair Corralation between OPC Energy and Intel

Assuming the 90 days trading horizon OPC Energy is expected to generate 0.6 times more return on investment than Intel. However, OPC Energy is 1.66 times less risky than Intel. It trades about 0.23 of its potential returns per unit of risk. Intel is currently generating about 0.05 per unit of risk. If you would invest  247,700  in OPC Energy on December 29, 2023 and sell it today you would earn a total of  15,400  from holding OPC Energy or generate 6.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy77.27%
ValuesDaily Returns

OPC Energy  vs.  Intel

 Performance 
       Timeline  
OPC Energy 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in OPC Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, OPC Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Intel 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

OPC Energy and Intel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OPC Energy and Intel

The main advantage of trading using opposite OPC Energy and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPC Energy 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 OPC Energy and Intel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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