Correlation Between Heavitree Brewery and Gaming Realms

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

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

Diversification Opportunities for Heavitree Brewery and Gaming Realms

0.53

Correlation Coefficient

Heavitree Brewery  Gaming Realms

Very weak diversification

The 3 months correlation between Heavitree and Gaming is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery and Gaming Realms plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Realms plc 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 Gaming Realms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Realms plc has no effect on the direction of Heavitree Brewery i.e., Heavitree Brewery and Gaming Realms go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Gaming Realms

Assuming the 90 days trading horizon Heavitree Brewery is expected to generate 26.53 times less return on investment than Gaming Realms. But when comparing it to its historical volatility, Heavitree Brewery is 14.04 times less risky than Gaming Realms. It trades about 0.13 of its potential returns per unit of risk. Gaming Realms plc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,880  in Gaming Realms plc on April 25, 2025 and sell it today you would earn a total of  1,500  from holding Gaming Realms plc or generate 38.66% 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.  Gaming Realms plc

Heavitree Brewery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heavitree Brewery are ranked lower than 10 (%) 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.

Gaming Realms plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Realms plc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Gaming Realms exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heavitree Brewery and Gaming Realms

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

The idea behind Heavitree Brewery and Gaming Realms plc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.