Correlation Between North Media and Intel

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

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

Diversification Opportunities for North Media and Intel

0.59

Correlation Coefficient

North Media  Intel

Very weak diversification

The 3 months correlation between North and Intel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and North Media 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 North Media AS 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 North Media i.e., North Media and Intel go up and down completely randomly.

Pair Corralation between North Media and Intel

Assuming the 90 days trading horizon North Media AS is expected to generate 0.79 times more return on investment than Intel. However, North Media AS is 1.27 times less risky than Intel. It trades about -0.18 of its potential returns per unit of risk. Intel is currently generating about -0.35 per unit of risk. If you would invest  6,540  in North Media AS on January 24, 2024 and sell it today you would lose (480.00) from holding North Media AS or give up 7.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

North Media AS  vs.  Intel

North Media AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Media AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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 unfluctuating 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.

Pair Trading with North Media and Intel

The main advantage of trading using opposite North Media and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media 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 North Media AS 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.