Correlation Between Intel and Naspers

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

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

Diversification Opportunities for Intel and Naspers

-0.35

Correlation Coefficient

Intel  Naspers

Very good diversification

The 3 months correlation between Intel and Naspers is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited 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 Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Intel i.e., Intel and Naspers go up and down completely randomly.

Pair Corralation between Intel and Naspers

Given the investment horizon of 90 days Intel is expected to under-perform the Naspers. In addition to that, Intel is 1.15 times more volatile than Naspers Limited. It trades about -0.45 of its total potential returns per unit of risk. Naspers Limited is currently generating about 0.14 per unit of volatility. If you would invest  17,925  in Naspers Limited on February 3, 2024 and sell it today you would earn a total of  1,175  from holding Naspers Limited or generate 6.56% return on investment over 90 days.

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

Intel  vs.  Naspers Limited

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 June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Naspers Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naspers Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Naspers reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intel and Naspers

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

The idea behind Intel and Naspers Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.