Correlation Between Advantest Corp and Intel Corp

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

Diversification Opportunities for Advantest Corp and Intel Corp

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between Advantest and Intel is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Advantest Corp ADR and Intel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel Corp and Advantest Corp 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 Advantest Corp ADR are associated (or correlated) with Intel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel Corp has no effect on the direction of Advantest Corp i.e., Advantest Corp and Intel Corp go up and down completely randomly.

Pair Corralation between Advantest Corp and Intel Corp

Assuming the 90 days horizon Advantest Corp ADR is expected to generate 1.22 times more return on investment than Intel Corp. However, Advantest Corp is 1.22 times more volatile than Intel Corp. It trades about -0.03 of its potential returns per unit of risk. Intel Corp is currently generating about -0.06 per unit of risk. If you would invest  8,880  in Advantest Corp ADR on May 20, 2022 and sell it today you would lose (2,633)  from holding Advantest Corp ADR or give up 29.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Advantest Corp ADR  vs.  Intel Corp

 Performance (%) 
       Timeline  
Advantest Corp ADR 
Advantest Performance
0 of 100
Over the last 90 days Advantest Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Advantest Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advantest Price Channel

Intel Corp 
Intel Performance
0 of 100
Over the last 90 days Intel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Intel Price Channel

Advantest Corp and Intel Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advantest Corp and Intel Corp

The main advantage of trading using opposite Advantest Corp and Intel Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantest Corp position performs unexpectedly, Intel Corp 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 Corp will offset losses from the drop in Intel Corp's long position.
The idea behind Advantest Corp ADR and Intel Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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