Correlation Between Intel and Celestica

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

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

Diversification Opportunities for Intel and Celestica

-0.47

Correlation Coefficient

Intel  Celestica

Very good diversification

The 3 months correlation between Intel and Celestica is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Intel i.e., Intel and Celestica go up and down completely randomly.

Pair Corralation between Intel and Celestica

Given the investment horizon of 90 days Intel is expected to under-perform the Celestica. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.18 times less risky than Celestica. The stock trades about -0.34 of its potential returns per unit of risk. The Celestica is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  4,637  in Celestica on January 26, 2024 and sell it today you would lose (227.00) from holding Celestica or give up 4.9% of portfolio value over 90 days.

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

Intel  vs.  Celestica

Intel

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Celestica

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Celestica

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

The idea behind Intel and Celestica 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.