Correlation Between Heavitree Brewery and Canadian General

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

By analyzing existing cross correlation between Heavitree Brewery and Canadian General Investments, you can compare the effects of market volatilities on Heavitree Brewery and Canadian General 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 Heavitree Brewery with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heavitree Brewery and Canadian General.

Diversification Opportunities for Heavitree Brewery and Canadian General

0.47

Correlation Coefficient

Heavitree Brewery  Canadian General

Very weak diversification

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

Pair Corralation between Heavitree Brewery and Canadian General

Assuming the 90 days trading horizon Heavitree Brewery is expected to generate 20.43 times less return on investment than Canadian General. But when comparing it to its historical volatility, Heavitree Brewery is 7.27 times less risky than Canadian General. It trades about 0.13 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  172,288  in Canadian General Investments on April 22, 2025 and sell it today you would earn a total of  51,212  from holding Canadian General Investments or generate 29.72% return on investment over 90 days.

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

Heavitree Brewery  vs.  Canadian General Investments

Heavitree Brewery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heavitree Brewery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Canadian General Inv

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Canadian General exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heavitree Brewery and Canadian General

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

The idea behind Heavitree Brewery and Canadian General Investments 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.