Correlation Between Intermediate Capital and Heavitree Brewery

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

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

Diversification Opportunities for Intermediate Capital and Heavitree Brewery

0.43

Correlation Coefficient

Intermediate Capital  Heavitree Brewery

Very weak diversification

The 3 months correlation between Intermediate and Heavitree is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery and Intermediate Capital 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 Intermediate Capital Group are associated (or correlated) with Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Intermediate Capital i.e., Intermediate Capital and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Intermediate Capital and Heavitree Brewery

Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 10.64 times more return on investment than Heavitree Brewery. However, Intermediate Capital is 10.64 times more volatile than Heavitree Brewery. It trades about 0.23 of its potential returns per unit of risk. Heavitree Brewery is currently generating about 0.13 per unit of risk. If you would invest  169,946  in Intermediate Capital Group on April 21, 2025 and sell it today you would earn a total of  45,654  from holding Intermediate Capital Group or generate 26.86% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Heavitree Brewery

Intermediate Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Intermediate Capital and Heavitree Brewery

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

The idea behind Intermediate Capital Group and Heavitree Brewery 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.